© 2014 The Authors.Eukaryotic gene expression is both promoted and inhibited by the reversible phosphorylation of the C-terminal domain of RNA polymerase II (pol II CTD). More than 20 Arabidopsis genes encode CTD phosphatase homologs, including four CTD phosphatase-like (CPL) family members. Although in vitro CTD phosphatase activity has been established for some CPLs, none have been shown to be involved in the phosphoregulation of pol II in vivo. Here we report that CPL4 is a CTD phosphatase essential for the viability of Arabidopsis thaliana. Mass spectrometry analysis identified the pol II subunits RPB1, RPB2 and RPB3 in the affinity-purified CPL4 complex. CPL4 dephosphorylates both Ser2- and Ser5-PO4 of the CTD in vitro, with a preference for Ser2-PO4. Arabidopsis plants overexpressing CPL4 accumulated hypophosphorylated pol II, whereas RNA interference-mediated silencing of CPL4 promoted hyperphosphorylation of pol II. A D128A mutation in the conserved DXDXT motif of the CPL4 catalytic domain resulted in a dominant negative form of CPL4, the overexpression of which inhibited transgene expression in transient assays. Inhibition was abolished by truncation of the phosphoprotein-binding Breast Cancer 1 C-terminal domain of CPL4, suggesting that both catalytic function and protein-protein interaction are essential for CPL4-mediated regulation of gene expression. We were unable to recover a homozygous cpl4 mutant, probably due to the zygotic lethality of this mutation. The reduction in CPL4 levels in CPL4RNAi plants increased transcript levels of a suite of herbicide/ xenobiotic-responsive genes and improved herbicide tolerance, thus suggesting an additional role for CPL4 as a negative regulator of the xenobiotic detoxification pathway.