Loss of function of the tumor suppressor protein BRCA1 is responsible for a high percentage of familial and also sporadic breast cancers. Early work identified a stimulatory transcriptional coactivator function for the BRCA1 protein, and more recently, BRCA1 has been implicated in transcriptional repression, although few examples of repressed genes have been characterized. We recently used an in vitro transcription assay to identify a biochemical mechanism that explained the BRCA1 stimulatory activity. In this study, we identified an ubiquitin-dependent mechanism by which BRCA1 inhibits transcription. BRCA1 ubiquitinates the transcriptional preinitiation complex, preventing stable association of TFIIE and TFIIH, and thus blocks the initiation of mRNA synthesis. What is striking about this mechanism of regulation by BRCA1 is that the ubiquitination of the preinitiation complex is not targeting proteins for degradation by the proteasome, nor are ubiquitin receptors modifying the activity, but rather the ubiquitin moiety itself interferes with the assembly of basal transcription factors at the promoter. Using RNAi to knockdown expression of the endogenous BRCA1 protein, we assessed the level of repression dependent on BRCA1 in the cell, and we found that BRCA1 is at least as significant a transcriptional repressor as it is an activator. These results define a biochemical mechanism by which the BRCA1 enzymatic activity regulates a key cellular process.