The survival of motor neurons (SMN) protein complex functions in the biogenesis of spliceosomal small nuclear ribonucleoprotein particles (snRNPs) and prob ably other RNPs. All spliceosomal snRNPs have a common core of seven Sm proteins. To mediate the assembly of snRNPs, the SMN complex must be able to bring together Sm proteins with U snRNAs. We showed previously that SMN and other components of the SMN complex interact directly with several Sm proteins. Here, we show that the SMN complex also interacts specifically with U1 snRNA. The stem--loop 1 domain of U1 (SL1) is necessary and sufficient for SMN complex binding in vivo and in vitro. Substitution of three nucleotides in the SL1 loop (SL1A3) abolishes SMN interaction, and the corresponding U1 snRNA (U1A3) is impaired in U1 snRNP biogenesis. Microinjection of excess SL1 but not SL1A3 into Xenopus oocytes inhibits SMN complex binding to U1 snRNA and U1 snRNP assembly. These findings indicate that SMN complex interaction with SL1 is sequence-specific and critical for U1 snRNP biogenesis, further supporting the direct role of the SMN complex in RNP biogenesis.