NIPP-1 is a nuclear inhibitory subunit of protein phosphatase-1 with structural similarities to some proteins involved in RNA processing. We report here that baculovirus-expressed recombinant NIPP-1 displays RNA-binding properties, as revealed by North-Western analysis, by UV-mediated cross-linking, by RNA mobility-shift assays, and by chromatography on poly(U)-Sepharose. NIPP-1 preferentially bound to U-rich sequences, including RNA-destabilizing AUUUA motifs. NIPP-1 also associated with single-stranded DNA, but had no affinity for double-stranded DNA. The binding of NIPP-1 to RNA was blocked by antibodies directed against the COOH terminus of NIPP-1, but was not affected by prior phosphorylation of NIPP-1 with protein kinase A or casein kinase-2, which decreases the affinity of NIPP-1 for protein phosphatase-1. The catalytic subunit of protein phosphatase-1 did not bind to poly(U)-Sepharose, but it bound very tightly after complexation with NIPP-1. These data are in agreement with a function of NIPP-1 in targeting protein phosphatase-1 to RNA.