Members of the double-stranded RNA-specific ribonuclease III (RNase III) family were shown to affect cell division and chromosome segregation, presumably through an RNA interference-dependent mechanism. Here, we show that in Saccharomyces cerevisiae, where the RNA interference machinery is not conserved, an orthologue of RNase III (Rnt1p) is required for progression of the cell cycle and nuclear division. The deletion of Rnt1p delayed cells in both G1 and G2/M phases of the cell cycle. Nuclear division and positioning at the bud neck were also impaired in Deltarnt1 cells. The cell cycle defects were restored by the expression of catalytically inactive Rnt1p, indicating that RNA cleavage is not essential for cell cycle progression. Rnt1p was found to exit from the nucleolus to the nucleoplasm in the G2/M phase, and perturbation of its localization pattern delayed the progression of cell division. A single mutation in the Rnt1p N-terminal domain prevented its accumulation in the nucleoplasm and slowed exit from mitosis without any detectable effects on RNA processing. Together, the data reveal a new role for a class II RNase III in the cell cycle and suggest that at least some members of the RNase III family possess catalysis-independent functions.