In the nucleolus the U3 snoRNA is recruited to the 80S pre-rRNA processing complex in the dense fibrillar component (DFC). The U3 snoRNA is found throughout the nucleolus and has been proposed to move with the preribosomes to the granular component (GC). In contrast, the localization of other RNAs, such as the U8 snoRNA, is restricted to the DFC. Here we show that the incorporation of the U3 snoRNA into the 80S processing complex is not dependent on pre-rRNA base pairing sequences but requires the B/C motif, a U3-specific protein-binding element. We also show that the binding of Mpp10 to the 80S U3 complex is dependent on sequences within the U3 snoRNA that base pair with the pre-rRNA adjacent to the initial cleavage site. Furthermore, mutations that inhibit 80S complex formation and/or the association of Mpp10 result in retention of the U3 snoRNA in the DFC. From this we propose that the GC localization of the U3 snoRNA is a direct result of its active involvement in the initial steps of ribosome biogenesis.The processing of eukaryotic pre-rRNA involves a series of endo-and exonucleolytic cleavages as well as a significant number of covalent, posttranscriptional modifications. Both the cleavage and modification events require small nucleolar RNAs (snoRNAs). The two major classes of snoRNA function as guide RNAs by base pairing with specific sites of modification in the substrate. The H/ACA snoRNAs function in the site-specific formation of pseudouridine, while the box C/D snoRNAs direct the 2Ј-O methylation of rRNA and certain snRNAs (reviewed in references 1 and 20). A subset of the box C/D snoRNAs that includes U3, U8, and U14 is essential for pre-rRNA cleavage events (17,19,26,31,33). These snoRNAs are proposed to function as molecular chaperones that use extensive rRNA complementary regions to orchestrate the folding and cleavage of the precursor transcript.The U3 snoRNA has two distinct functional domains (Fig. 1A). The 5Ј domain contains the sequence elements that are important for base pairing with the pre-rRNA (GAC box, box A, box AЈ, 5Ј hinge, and 3Ј hinge) (reviewed in reference 39). Box A base pairs with a region near the 5Ј terminus of the 18S rRNA and in doing so regulates the formation of an evolutionarily conserved pseudoknot structure (16,35). The 5Ј hinge and 3Ј hinge sequences are complementary to regions of the 5Ј external transcribed spacer (5Ј ETS) (6). The 3Ј hinge sequence has the potential to base pair with the pre-rRNA adjacent to the primary processing site. Interestingly, the 3Ј hinge region is more important for pre-rRNA processing in Xenopus laevis oocytes (6), while rRNA processing in Saccharomyces cerevisiae is more dependent on the 5Ј hinge sequence (3). The 3Ј domain of the U3 snoRNA contains the evolutionarily conserved and structurally related box CЈ/D motif (the C/D motif in other box C/D snoRNAs) and the U3-specific box B/C motif. The box C/D motif is essential for nucleolar localization, RNA stability, and 5Ј cap hypermethylation. In contrast, the U3-specific B/C motif is ...