Dimethyl sulfoxide (DMSO) is widely used as a cosolvent to solubilize hydrophobic compounds in RNA-ligand binding assays. Although it is known that high concentrations of DMSO (>75%) can significantly affect RNA structure and folding energetics, a thorough analysis of how lower concentrations (<10%) of DMSO typically used in binding assays affects RNA structure and ligand binding has not been undertaken. Here, we use NMR and 2-aminopurine fluorescence spectroscopy to examine how DMSO affects the structure, dynamics, and ligand binding properties of two flexible hairpin RNAs: the transactivation response element from HIV-1 and bacterial ribosomal A-site. In both cases, 5-10% DMSO decreased stacking interactions and increased local disorder in noncanonical residues within bulges and loops and resulted in 0.3-4-fold reduction in the measured binding affinities for different small molecules, with the greatest reduction observed for an intercalating compound that binds RNA nonspecifically. Our results suggest that, by competing for hydrophobic interactions, DMSO can have a small but significant effect on RNA structure and ligand binding. These effects should be considered when developing ligand binding assays and high throughput screens.