Sub1 was originally identified as a transcriptional co-activator and later demonstrated to have pleiotropic functions during multiple transcription steps, including initiation, elongation and termination. The present study reveals a novel function of Sub1 as a transcription repressor in budding yeast. Sub1 does not activate IMP dehydrogenase 2 (IMD2) gene expression but rather represses its expression. First, we examined the genetic interaction of Sub1 with the transcription elongation factor S-II/TFIIS, which is encoded by the DST1 gene. Disruption of the SUB1 gene partially suppressed sensitivity to the transcription elongation inhibitor mycophenolate (MPA) in a dst1 gene deletion mutant. SUB1 gene deletion increased the expression level of the IMD2 gene, which confers resistance to MPA, indicating that Sub1 functions to repress IMD2 gene expression. Sub1 located around the promoter region of the IMD2 gene. The upstream region of the transcription start sites was required for Sub1 to repress the IMD2 gene expression. These results suggest that the transcriptional co-activator Sub1 also has a role in transcriptional repression during transcription initiation in vivo.