Alu repetitive sequences are the most abundant short interspersed DNA elements in the human genome. Full-length Alu elements are composed of two tandem sequence monomers, the left and right Alu arms, both derived from the 7SL signal recognition particle RNA. Since Alu elements are common in protein-coding genes, they are frequently transcribed into pre-mRNAs. Here, we demonstrate that the right arms of nascent Alu transcripts synthesized within pre-mRNA introns are processed into metabolically stable small RNAs. The intron-encoded Alu RNAs, termed AluACA RNAs, are structurally highly reminiscent of box H/ACA small Cajal body (CB) RNAs (scaRNAs). They are composed of two hairpin units followed by the essential H (AnAnnA) and ACA box motifs. The mature AluACA RNAs associate with the four H/ACA core proteins: dyskerin, Nop10, Nhp2, and Gar1. Moreover, the 3' hairpin of AluACA RNAs carries two closely spaced CB localization motifs, CAB boxes (UGAG), which bind Wdr79 in a cumulative fashion. In contrast to canonical H/ACA scaRNPs, which concentrate in CBs, the AluACA RNPs accumulate in the nucleoplasm. Identification of 348 human AluACA RNAs demonstrates that intron-encoded AluACA RNAs represent a novel, large subgroup of H/ACA RNAs, which are apparently confined to human or primate cells.