The exosome is an RNA-decay complex that constantly monitors transcription and contributes to post-transcriptional turnover of faulty mRNAs. Yet how nuclear RNA surveillance by the exosome is coordinated with transcription is still unknown. Here we show that the RNA exosome of Schizosaccharomyces pombe can target the transcription machinery by terminating transcription events associated with paused and backtracked RNA polymerase II (RNAPII); this is contrary to the notion that the exosome acts exclusively on RNAs that have been released by RNAPII. Our data support a mechanism by which RNAPII backtracking provides a free RNA 3' end for the core exosome, which results in transcription termination with concomitant degradation of the associated transcript. These findings uncover a mechanism of cotranscriptional RNA surveillance whereby termination of transcription by the exosome prevents formation of aberrant readthrough RNAs and transcriptional interference at neighboring genes.