We have isolated and microsequenced Snu17p, a novel yeast protein with a predicted molecular mass of 17 kDa that contains an RNA recognition motif. We demonstrate that Snu17p binds specifically to the U2 small nuclear ribonucleoprotein (snRNP) and that it is part of the spliceosome, since the pre-mRNA and the lariat-exon 2 are specifically coprecipitated with Snu17p. Although the SNU17 gene is not essential, its knockout leads to a slow-growth phenotype and to a pre-mRNA splicing defect in vivo. In addition, the first step of splicing is dramatically decreased in extracts prepared from the snu17 deletion (snu17Delta) mutant. This defect is efficiently reversed by the addition of recombinant Snu17p. To investigate the step of spliceosome assembly at which Snu17p acts, we have used nondenaturing gel electrophoresis. In Snu17p-deficient extracts, the spliceosome runs as a single slowly migrating complex. In wild-type extracts, usually at least two distinct complexes are observed: the prespliceosome, or B complex, containing the U2 but not the U1 snRNP, and the catalytically active spliceosome, or A complex, containing the U2, U6, and U5 snRNPs. Northern blot analysis and affinity purification of the snu17Delta spliceosome showed that it contains the U1, U2, U6, U5, and U4 snRNPs. The unexpected stabilization of the U1 snRNP and the lack of dissociation of the U4 snRNP suggest that loss of Snu17p inhibits the progression of spliceosome assembly prior to U1 snRNP release and after [U4/U6.U5] tri-snRNP addition.