Ample evidence indicates that Alu family interspersed elements retrotranspose via primary transcripts synthesized by RNA polymerase III (pol III) and that this transposition sometimes results in genetic disorders in humans. However, Alu primary transcripts can be processed posttranscriptionally, diverting them away from the transposition pathway. The pol III termination signal of a well-characterized murine B1 (Alu-equivalent) element inhibits RNA 3' processing, thereby stabilizing the putative transposition intermediary. We used an immobilized template-based assay to examine transcription termination by VA1, 7SL, and Alu class III templates and the role of transcript release in the pol III terminator-dependent inhibition of processing of B1-Alu transcripts. We found that the RNA-binding protein La confers this terminator-dependent 3' processing inhibition on transcripts released from the B1-Alu template. Using pure recombinant La protein and affinity-purified transcription complexes, we also demonstrate that La facilitates multiple rounds of transcription reinitiation by pol III. These results illustrate an important role for La in RNA production by demonstrating its ability to clear the termination sites of class III templates, thereby promoting efficient use of transcription complexes by pol III. The role of La as a potential regulatory factor in transcript maturation and how this might apply to Alu interspersed elements is discussed.