The perinucleolar compartment (PNC) is a unique nuclear structure preferentially localized at the periphery of the nucleolus. Several small RNAs transcribed by RNA polymerase III (e.g., the Y RNAs, MRP RNA, and RNase P H1 RNA) and the polypyrimidine tract binding protein (PTB; hnRNP I) have thus far been identified in the PNC (Ghetti, A., S. PinolRoma, W.M. Michael, C. Morandi, and G. Dreyfuss. 1992. Nucleic Acids Res. 20:3671-3678; Matera, A.G., M.R. Frey, K. Margelot, and S.L. Wolin. 1995. J. Cell Biol. 129:1181-1193; Lee, B., A.G. Matera, D.C. Ward, and J. Craft. 1996. Proc. Natl. Acad. Sci. USA. 93: 11471-11476). In this report, we have further characterized this structure in both fixed and living cells. Detection of the PNC in a large number of human cancer and normal cells showed that PNCs are much more prevalent in cancer cells. Analysis through the cell cycle using immunolabeling with a monoclonal antibody, SH54, specifically recognizing PTB, demonstrated that the PNC dissociates at the beginning of mitosis and reforms at late telophase in the daughter nuclei. To visualize the PNC in living cells, a fusion protein between PTB and green fluorescent protein (GFP) was generated. Time lapse studies revealed that the size and shape of the PNC is dynamic over time. In addition, electron microscopic examination in optimally fixed cells revealed that the PNC is composed of multiple strands, each measuring approximately 80-180 nm diam. Some of the strands are in direct contact with the surface of the nucleolus. Furthermore, analysis of the sequence requirement for targeting PTB to the PNC using a series of deletion mutants of the GFP-PTB fusion protein showed that at least three RRMs at either the COOH or NH2 terminus are required for the fusion protein to be targeted to the PNC. This finding suggests that RNA binding may be necessary for PTB to be localized in the PNC.