The BYpass of Ess1 (Bye1) protein is a putative S. cerevisiae transcription factor homologous to the human cancer-associated PHF3/DIDO family of proteins. Bye1 contains a Plant Homeodomain (PHD) and a TFIIS-like domain. The Bye1 PHD finger interacts with tri-methylated lysine 4 of histone H3 (H3K4me3) while the TFIIS-like domain binds to RNA polymerase (Pol) II. Here, we investigated the contribution of these structural features to Bye1 recruitment to chromatin as well as its function in transcriptional regulation. Genome-wide analysis of Bye1 distribution revealed at least two distinct modes of association with actively transcribed genes: within the core of Pol II- and Pol III-transcribed genes concomitant with the presence of the TFIIS transcription factor and, additionally, with promoters of a subset of Pol II-transcribed genes. Specific loss of H3K4me3 abolishes Bye1 association to gene promoters, but doesn't affect its binding within gene bodies. Genetic interactions suggested an essential role of Bye1 in cell fitness under stress conditions compensating the absence of TFIIS. Furthermore, BYE1 deletion resulted in the attenuation of GAL genes expression upon galactose-mediated induction indicating its positive role in transcription regulation. Together, these findings point to a bimodal role of Bye1 in regulation of Pol II transcription. It is recruited via its PHD domain to H3K4 tri-methylated promoters at early steps of transcription. Once Pol II is engaged into elongation, Bye1 binds directly to the transcriptional machinery, modulating its progression along the gene.