Microprocessor, composed of DROSHA and DGCR8, processes primary microRNAs (pri-miRNAs) in miRNA biogenesis. Its cleavage efficiency and accuracy are enhanced because DGCR8 interacts with the apical UGU motif of pri-miRNAs. However, the mechanism and influence of DGCR8-UGU interaction on cellular miRNA expression are still elusive. In this study, we demonstrated that Rhed (i.e., the RNA-binding heme domain, amino acids 285-478) of DGCR8 interacts with UGU. In addition, we identified three amino acids 461-463 in Rhed, which are critical for the UGU interaction and essential for Microprocessor to accurately and efficiently process UGU-pri-miRNAs in vitro and UGU-miRNA expression in human cells. Furthermore, we found that within the DGCR8 dimer, the amino acids 461-463 from one monomer are capable of discriminating between UGU- and noUGU-pri-miRNAs. Our findings improve the current understanding of the substrate-recognizing mechanism of DGCR8 and implicate the roles of this recognition in differentiating miRNA expression in human cells.