The phosphorylation state of the C-terminal domain of RNA polymerase II is required for the temporal and spatial recruitment of various factors that mediate transcription and RNA processing throughout the transcriptional cycle. Therefore, changes in CTD phosphorylation by site-specific kinases/phosphatases are critical for the accurate transmission of information during transcription. Unlike kinases, CTD phosphatases have been traditionally neglected as they are thought to act as passive negative regulators that remove all phosphate marks at the conclusion of transcription. This over-simplified view has been disputed in recent years and new data assert the active and regulatory role phosphatases play in transcription. We now know that CTD phosphatases ensure the proper transition between different stages of transcription, balance the distribution of phosphorylation for accurate termination and re-initiation, and prevent inappropriate expression of certain genes. In this review, we focus on the specific roles of CTD phosphatases in regulating transcription. In particular, we emphasize how specificity and timing of dephosphorylation are achieved for these phosphatases and consider the various regulatory factors that affect these dynamics.