In Saccharomyces cerevisiae, the maturation of both pre-rRNA and pre-small nucleolar RNAs (pre-snoRNAs) involves common factors, thereby providing a potential mechanism for the coregulation of snoRNA and rRNA synthesis. In this study, we examined the global impact of the double-stranded-RNA-specific RNase Rnt1p, which is required for pre-rRNA processing, on the maturation of all known snoRNAs. In silico searches for Rnt1p cleavage signals, and genome-wide analysis of the Rnt1p-dependent expression profile, identified seven new Rnt1p substrates. Interestingly, two of the newly identified Rnt1p-dependent snoRNAs, snR39 and snR59, are located in the introns of the ribosomal protein genes RPL7A and RPL7B. In vitro and in vivo experiments indicated that snR39 is normally processed from the lariat of RPL7A, suggesting that the expressions of RPL7A and snR39 are linked. In contrast, snR59 is produced by a direct cleavage of the RPL7B pre-mRNA, indicating that a single pre-mRNA transcript cannot be spliced to produce a mature RPL7B mRNA and processed by Rnt1p to produce a mature snR59 simultaneously. The results presented here reveal a new role of yeast RNase III in the processing of intron-encoded snoRNAs that permits independent regulation of the host mRNA and its associated snoRNA.Bacterial pre-rRNA processing is carried out by a defined set of nucleases (3-5, 43, 52). Key among this set is RNase III, initially isolated by its ability to bind and cleave duplex RNA (47, 48). RNase III generates the immediate precursors to the mature 16S and 23S rRNAs from the primary transcripts by cleaving within two extended RNA duplexes formed by longrange interactions that pair the termini of each rRNA (7, 63). These long-range interactions provide a simple method of coordinating the processing events at both ends of the transcript. In eukaryotes, pre-rRNA processing is more complex and requires many more small nucleolar RNAs (snoRNAs) and protein components with overlapping functions (13,15,16,41,46). For example, the removal of the 5Ј external-transcribed spacer requires 4 snoRNAs (U3, snR30, U14, and snR10) and about 64 snoRNAs are required for rRNA modifications (24, 57). snoRNAs are divided into two major subclasses: the first includes box C/D snoRNAs that function mostly as a guide for the methylation of rRNA (6, 20, 21, 55), while the second includes H/ACA snoRNAs that guide RNA pseudouridine formation (25,39,59). Most mammalian snoRNAs are encoded within intron sequences and are processed from either unspliced precursors or lariat species (18,19,64). In Saccharomyces cerevisiae, most snoRNAs are transcribed either as independent units or as a part of polycistronic transcript, while only 7 of the 66 known snoRNAs are located in the introns of mRNAs (14,44,53). Several polycistronic snoRNAs, and a few monocistronic ones, are processed by Rnt1p, the orthologue of the bacterial RNase III (30), which is also required for the processing of the pre-rRNA's 3Ј end (2,10,11,23,33). Following processing by Rnt1p, the RNAs are trimmed...