Loss of a nonenzymatic function of XPG results in defective transcription-coupled repair (TCR), Cockayne syndrome (CS), and early death, but the molecular basis for these phenotypes is unknown. Mutation of CSB, CSA, or the TFIIH helicases XPB and XPD can also cause defective TCR and CS. We show that XPG interacts with elongating RNA polymerase II (RNAPII) in the cell and binds stalled RNAPII ternary complexes in vitro both independently and cooperatively with CSB. XPG binds transcription-sized DNA bubbles through two domains not required for incision and functionally interacts with CSB on these bubbles to stimulate its ATPase activity. Bound RNAPII blocks bubble incision by XPG, but an ATP hydrolysis-dependent process involving TFIIH creates access to the junction, allowing incision. Together, these results implicate coordinated recognition of stalled transcription by XPG and CSB in TCR initiation and suggest that TFIIH-dependent remodeling of stalled RNAPII without release may be sufficient to allow repair.