RNA polymerase II (RNAPII) transcription involves initiation from a promoter, transcriptional elongation through the gene, and termination in the terminator region. In bacteria, terminators often contain specific DNA elements provoking polymerase dissociation, but RNAPII transcription termination is thought to be driven entirely by protein co-factors. We used biochemical reconstitution, single-molecule studies, and genome-wide analysis in yeast to study RNAPII termination. Transcription into natural terminators by pure RNAPII results in spontaneous termination at specific sequences containing T-tracts. Single-molecule analysis indicates that termination involves pausing without backtracking. The “torpedo” Rat1-Rai1 exonuclease (XRN2 in humans) greatly stimulates spontaneous termination but is ineffectual on other paused RNAPIIs. By contrast, elongation factor Spt4-Spt5 (DSIF) suppresses termination. Genome-wide analysis further indicates that termination occurs by transcript cleavage at the poly(A) site exposing a new 5′ RNA-end that allows Rat1-Rai1 loading, which then catches up with destabilized RNAPII at specific termination sites to end transcription.