Gp39, a small protein encoded by Thermus thermophilus phage P23-45, specifically binds the host RNA polymerase (RNAP) and inhibits transcription initiation. Here, we demonstrate that gp39 also acts as an antiterminator during transcription through intrinsic terminators. The antitermination activity of gp39 relies on its ability to suppress transcription pausing at poly(U) tracks. Gp39 also accelerates transcription elongation by decreasing RNAP pausing and backtracking but does not significantly affect the rates of catalysis of individual reactions in the RNAP active center. We mapped the RNAP-gp39 interaction site to the β flap, a domain that forms a part of the RNA exit channel and is also a likely target for λ phage antiterminator proteins Q and N, and for bacterial elongation factor NusA. However, in contrast to Q and N, gp39 does not depend on NusA or other auxiliary factors for its activity. To our knowledge, gp39 is the first characterized phage-encoded transcription factor that affects every step of the transcription cycle and suppresses transcription termination through its antipausing activity.