NIPP1 (351 residues) is a major regulatory and RNA-anchoring subunit of protein phosphatase 1 in the nucleus. Using recombinant and synthetic fragments of NIPP1, the RNA-binding domain was mapped to the C-terminal residues 330-351. A synthetic peptide encompassing this sequence equalled intact NIPP1 in RNA-binding affinity and could be used to dissociate NIPP1 from the nuclear particulate fraction. An NIPP1 fragment consisting of residues 225-351 (Ard1/NIPP1gamma), that may be encoded by an alternatively spliced transcript in transformed B-lymphocytes, displayed a single-strand Mg(2+)-dependent endoribonuclease activity. However, full-length NIPP1 and NIPP1(143-351) were not able to cleave RNA, indicating that the endoribonuclease activity of NIPP1 is restrained by its central domain. The endoribonuclease activity was also recovered in the RNA-binding domain, NIPP1(330-351), but with a 30-fold lower specific activity. Thus, the endoribonuclease catalytic site and the RNA-binding site both reside in the C-terminal 22 residues of NIPP1. The latter domain does not conform to any known nucleic-acid binding motif.