Yth1p is the yeast homologue of the 30 kDa subunit of mammalian cleavage and polyadenylation specificity factor (CPSF). The protein is part of the cleavage and polyadenylation factor CPF, which includes cleavage factor II (CF II) and polyadenylation factor I (PF I), and is required for both steps in pre-mRNA 3'-end processing. Yth1p is an RNA-binding protein that was previously shown to be essential for polyadenylation. Here, we demonstrate that Yth1p is also required for the cleavage reaction and that two protein domains have distinct roles in 3'-end processing. The C-terminal part is required in polyadenylation to tether Fip1p and poly(A) polymerase to the rest of CPF. A single point mutation in the highly conserved second zinc finger impairs both cleavage and polyadenylation, and affects the ability of Yth1p to interact with the pre-mRNA and other CPF subunits. Finally, we find that Yth1p binds to CYC1 pre-mRNA in the vicinity of the cleavage site. Our results indicate that Yth1p is important for the integrity of CPF and participates in the recognition of the cleavage site.