The genes encoding the small nucleolar RNA (snoRNA) species snR190 and U14 are located close together in the genome of Saccharomyces cerevisiae. Here we report that these two snoRNAs are synthesized by processing of a larger common transcript. In strains mutant for two 5'-->3' exonucleases, Xrn1p and Rat1p, families of 5'-extended forms of snR190 and U14 accumulate; these have 5' extensions of up to 42 and 55 nucleotides, respectively. We conclude that the 5' ends of both snR190 and U14 are generated by exonuclease digestion from upstream processing sites. In contrast to snR190 and U14, the snoRNAs U18 and U24 are excised from the introns of pre-mRNAs which encode proteins in their exonic sequences. Analysis of RNA extracted from a dbr1-delta strain, which lacks intron lariat-debranching activity, shows that U24 can be synthesized only from the debranched lariat. In contrast, a substantial level of U18 can be synthesized in the absence of debranching activity. The 5' ends of these snoRNAs are also generated by Xrn1p and Rat1p. The same exonucleases are responsible for the degradation of several excised fragments of the pre-rRNA spacer regions, in addition to generating the 5' end of the 5.8S rRNA. Processing of the pre-rRNA and both intronic and polycistronic snoRNAs therefore involves common components.