The mechanism behind the positive action of introns upon transcription and the biological significance of this positive feedback remains unclear. Functional ablation of splice sites within an HIV-derived env cDNA significantly reduced transcription that was rescued by a U1 snRNA modified to bind to the mutated splice donor (SD). Using this model we further characterized both the U1 and pre-mRNA structural requirements for transcriptional enhancement. U1 snRNA rescued as a mature Sm-type snRNP with an intact stem loop II. Position and sequence context for U1-binding is crucial because a promoter proximal intron placed upstream of the mutated SD failed to rescue transcription. Furthermore, U1-rescue was independent of promoter and exon sequence and is partially replaced by the transcription elongation activator Tat, pointing to an intron-localized block in transcriptional elongation. Thus, transcriptional coupling of U1 snRNA binding to the SD may licence the polymerase for transcription through the intron.