TFIIH is a multisubunit protein complex involved in RNA polymerase II transcription and nucleotide excision repair, which removes a wide variety of DNA lesions including UV-induced photoproducts. Mutations in the DNA- dependent ATPase/helicase subunits of TFIIH, XPB and XPD, are associated with three inherited syndromes as follows: xeroderma pigmentosum with or without Cockayne syndrome and trichothiodystrophy. By using epitope-tagged XPD we purified mammalian TFIIH carrying a wild type or an active-site mutant XPD subunit. Contrary to XPB, XPD helicase activity was dispensable for in vitro transcription, catalytic formation of trinucleotide transcripts, and promoter opening. Moreover, in contrast to XPB, microinjection of mutant XPD cDNA did not interfere with in vivo transcription. These data show directly that XPD activity is not required for transcription. However, during DNA repair, neither 5' nor 3' incisions in defined positions around a DNA adduct were detected in the presence of TFIIH containing inactive XPD, although substantial damage-dependent DNA synthesis was induced by the presence of mutant XPD both in cells and cell extracts. The aberrant damage-dependent DNA synthesis caused by the mutant XPD does not lead to effective repair, consistent with the discrepancy between repair synthesis and survival in cells from a number of XP-D patients.