In eukaryotic cells, post-translational histone modifications have an important role in gene regulation. Starting with early work on histone acetylation1, a variety of residue-specific modifications have now been linked to RNA polymerase II (RNAP2) activity2, 3, but it remains unclear if these markers are active regulators of transcription or just passive byproducts4, 5. This is because studies have traditionally relied on fixed cell populations, meaning temporal resolution is limited to minutes at best, and correlated factors may not actually be present in the same cell at the same time. Complementary approaches are therefore needed to probe the dynamic interplay of histone modifications and RNAP2 with higher temporal resolution in single living cells2, 5, 6. Here we address this problem by developing a system to track residue-specific histone modifications and RNAP2 phosphorylation in living cells by fluorescence microscopy. This increases temporal resolution to the tens-of-seconds range. Our single-cell analysis reveals histone H3 lysine-27 acetylation at a gene locus can alter downstream transcription kinetics by as much as 50%, affecting two temporally separate events. First acetylation enhances the search kinetics of transcriptional activators, and later the acetylation accelerates the transition of RNAP2 from initiation to elongation. Signatures of the latter can be found genome-wide using chromatin immunoprecipitation followed by sequencing. We argue that this regulation leads to a robust and potentially tunable transcriptional response.