Mycophenolic acid (MPA) is the active metabolite of mycophenolate mofetil, a drug that is widely used for immunosuppression in organ transplantation and autoimmune diseases, as well as anticancer chemotherapy. It inhibits IMP dehydrogenase, a rate-limiting enzyme in de novo synthesis of guanidine nucleotides. MPA treatment interferes with transcription elongation, resulting in a drastic reduction of pre-rRNA and pre-tRNA synthesis, the disruption of the nucleolus, and consequently cell cycle arrest. Here, we investigated the mechanism whereby MPA inhibits RNA polymerase III (Pol III) activity, in both yeast and mammalian cells. We show that MPA rapidly inhibits Pol III by depleting GTP. Although MPA treatment can activate p53, this is not required for Pol III transcriptional inhibition. The Pol III repressor MAF1 is also not responsible for inhibiting Pol III in response to MPA treatment. We show that upon MPA treatment, the levels of selected Pol III subunits decrease, but this is secondary to transcriptional inhibition. Chromatin immunoprecipitation (ChIP) experiments show that Pol III does not fully dissociate from tRNA genes in yeast treated with MPA, even though there is a sharp decrease in the levels of newly transcribed tRNAs. We propose that in yeast, GTP depletion may lead to Pol III stalling.