Animal germline development and fertility rely on paralogs of general transcription factors that recruit RNA polymerase II to ensure cell type-specific gene expression. It remains unclear whether gene expression processes downstream from such paralog-based transcription is distinct from that of canonical RNA polymerase II genes. In Drosophila, the testis-specific TBP-associated factors (tTAFs) activate over a thousand spermatocyte-specific gene promoters to enable meiosis and germ cell differentiation. Here, we show that efficient termination of tTAF-activated transcription relies on testis-specific paralogs of canonical polymerase-associated factor 1 complex (PAF1C) proteins, which form a testis-specific PAF1C (tPAF). Consequently, tPAF mutants show aberrant expression of hundreds of downstream genes due to read-in transcription. Furthermore, tPAF facilitates expression of Y-linked male fertility factor genes and thus serves to maintain spermatocyte-specific gene expression. Consistently, tPAF is required for the segregation of meiotic chromosomes and male fertility. Supported by comparative in vivo protein interaction assays, we provide a mechanistic model for the functional divergence of tPAF and the PAF1C and identify transcription termination as a developmentally regulated process required for germline-specific gene expression.