Expression of replication-dependent histone genes at the posttranscriptional level is controlled by stem-loop binding protein (SLBP). One function of SLBP is to bind the stem-loop structure in the 3' untranslated region of histone pre-mRNAs and facilitate 3' end processing. Interaction of SLBP with the stem-loop is mediated by the centrally located RNA binding domain (RBD). Here we identify several highly conserved amino acids in the RBD mutation of which results in complete or substantial loss of SLBP binding activity. We also identify residues in the RBD which do not contribute to binding to the stem-loop RNA but instead are required for efficient recruitment of U7 snRNP to histone pre-mRNA. Recruitment of the U7 snRNP to the pre-mRNA also depends on the 20-amino-acid region located immediately downstream of the RBD. A critical region of the RBD contains the sequence YDRY. The tyrosines are required for RNA binding, and the DR dipeptide is essential for processing but not for RNA binding. It is likely that the RBD of SLBP interacts directly with both the stem-loop RNA and other processing factor(s), most likely the U7 snRNP, to facilitate histone pre-mRNA processing.