Previous studies in vivo reported that processing of primary microRNA (pri-miRNA) is coupled to transcription by RNA polymerase II (RNAP II) and can occur co-transcriptionally. Here we have established a robust in vivo system in which pri-miRNA is transcribed by RNAP II and processed to pre-miRNA in HeLa cell nuclear extracts. We show that both the kinetics and efficiency of pri-miRNA processing are dramatically enhanced in this system compared to that of the corresponding naked pri-miRNA. Moreover, this enhancement is general as it occurs with multiple pri-miRNAs. We also show that nascent pri-miRNA is efficiently processed before it is released from the DNA template. Together, our work directly demonstrates that transcription and pri-miRNA processing are functionally coupled and establishes the first in vivo model systems for this functional coupling and for co-transcriptional processing.