The trans-spliced leader RNA (SL RNA) of nematodes resembles U snRNAs both in cap structure and in the presence of a consensus Sm binding site. We show here that synthetic SL RNA, synthesized by in vitro transcription, is efficiently used as a spliced leader donor in trans-splicing reactions catalyzed by a cell free extract prepared from developing embryos of the parasitic nematode, Ascaris lumbricoides. Efficient utilization of synthetic SL RNA requires a functional Sm binding site. Mutations within the Sm binding sequence that prevent immunoprecipitation by Sm antisera and prevent cap trimethylation abolish trans-splicing. The effect on trans-splicing is not due to undermethylation of the cap structure.