Conventional chemotherapy not only kills tumor cells but also changes gene expression in treatment-damaged tissues, inducing production of multiple tumor-supporting secreted factors. This secretory phenotype was found here to be mediated in part by a damage-inducible cell-cycle inhibitor p21 (CDKN1A). We developed small-molecule compounds that inhibit damage-induced transcription downstream of p21. These compounds were identified as selective inhibitors of a transcription-regulating kinase CDK8 and its isoform CDK19. Remarkably, p21 was found to bind to CDK8 and stimulate its kinase activity. p21 and CDK8 also cooperate in the formation of internucleolar bodies, where both proteins accumulate. A CDK8 inhibitor suppresses damage-induced tumor-promoting paracrine activities of tumor cells and normal fibroblasts and reverses the increase in tumor engraftment and serum mitogenic activity in mice pretreated with a chemotherapeutic drug. The inhibitor also increases the efficacy of chemotherapy against xenografts formed by tumor cell/fibroblast mixtures. Microarray data analysis revealed striking correlations between CDK8 expression and poor survival in breast and ovarian cancers. CDK8 inhibition offers a promising approach to increasing the efficacy of cancer chemotherapy.