The cap-binding complex (CBC) binds to the cap structure of mRNA to protect it from exonucleases as well as to regulate downstream post-transcriptional events, translational initiation and nonsense-mediated mRNA decay. However, its role in regulation of the upstream transcriptional events such as initiation or elongation remains unknown. Here, using a formaldehyde-based in vivo cross-linking and chromatin immunoprecipitation assay in conjunction with transcriptional, mutational and co-immunoprecipitational analyses, we show that CBC is recruited to the body of yeast gene, and then stimulates the formation of pre-initiation complex (PIC) at several yeast promoters through its interaction with Mot1p (modifier of transcription). Mot1p is recruited to these promoters, and enhances the PIC formation. We find that CBC promotes the recruitment of Mot1p which subsequently stimulates PIC formation at these promoters. Furthermore, the formation of PIC is essential for recruitment of CBC. Thus, our study presents an interesting observation that an mRNA binding factor exhibits a reciprocal synergistic effect on formation of PIC (and hence transcriptional initiation) at the promoter, revealing a new pathway of eukaryotic gene regulation in vivo.