A surface that is required for rapid formation of preinitiation complexes (PICs) was identified on the N-terminal domain (NTD) of the RNA Pol II general transcription factor TFIIA. Site-specific photocross-linkers and tethered protein cleavage reagents positioned on the NTD of TFIIA and assembled in PICs identified the SAGA subunit Spt8 and the TFIID subunit Taf4 as located near this surface. In agreement with these findings, mutations in Spt8 and the TFIIA NTD interact genetically. Using purified proteins, it was found that TFIIA and Spt8 do not stably bind to each other, but rather both compete for binding to TBP. Consistent with this competition, Spt8 inhibits the binding of SAGA to PICs in the absence of activator. In the presence of activator, Spt8 enhances transcription in vitro, and the positive function of the TFIIA NTD is largely mediated through Spt8. Our results suggest a mechanism for the previously observed positive and negative effects of Spt8 on transcription observed in vivo.