Cdk7 has been shown previously to be able to phosphorylate and activate many different Cdks in vitro. However, conclusive evidence that Cdk7 acts as a Cdk-activating kinase (CAK) in vivo has remained elusive. Adding to the controversy is the fact that in the budding yeast Saccharomyces cerevisiae, CAK activity is provided by the CAK1/Civ1 protein, which is unrelated to Cdk7. Furthermore Kin28, the budding yeast Cdk7 homolog, functions not as a CAK but as the catalytic subunit of TFIIH. Vertebrate Cdk7 is also known to be part of TFIIH. Therefore, in the absence of better genetic evidence, it was proposed that the CAK activity of Cdk7 may be an in vitro artifact. In an attempt to resolve this issue, we cloned the Drosophila cdk7 homolog and created null and temperature-sensitive mutations. Here we demonstrate that cdk7 is necessary for CAK activity in vivo in a multicellular organism. We show that cdk7 activity is required for the activation of both Cdc2/Cyclin A and Cdc2/Cyclin B complexes, and for cell division. These results suggest that there may be a fundamental difference in the way metazoans and budding yeast effect a key modification of Cdks.