The ribosomal RNA (rRNA) genes of most eukaryotic organisms are arranged in one or more tandem arrays, often termed nucleolar organizer regions. The biological implications of this tandem organization are not known. We have tested the requirement for such a chromosomal organization by directly comparing the transcription and processing of rRNA in isogenic strains of Saccharomyces cerevisiae that differ only in the organization of their rRNA genes. Strain L-1489 carries the RDN locus, consisting of 100-150 copies of the rRNA genes in a tandem array on chromosome XII. Strain L-1521 has a complete deletion of the RDN array, but carries many copies of a plasmid that includes a single rRNA gene. While this strain grows reasonably well, the average transcriptional activity of the plasmid genes is substantially less than that of the chromosomal copies. However, there is little difference in the processing of the 35S pre-rRNA to the mature 25S:5.8S and 18S products. Thus, neither a chromosomal location nor a tandem repeat of the rRNA genes is important for the assembly and function of the many protein and RNA molecules necessary for the processing of the rRNA transcripts. We investigated the consequence of a dispersed gene arrangement on nucleolar structure. Immunofluorescence microscopy revealed that in strain L-1521 the yeast fibrillarin, Nop1p, rather than being confined to a defined nucleolus at the edge of the nucleus as it is in cells with the normal arrangement of rRNA genes, is spread throughout the nucleus. This observation implies that each plasmid rRNA gene can serve as a nucleolar organizer. Finally, data from pulse-labeling experiments show that the repression of rRNA transcription due to failure of the secretory pathway is independent of whether the rRNA genes are at the RDN locus on chromosome XII or on plasmids. This result suggests that the regulation of rRNA transcription occurs at the level of soluble factors rather than chromatin structure.