Cellular RNA metabolism has a broad range of functional aspects in cell growth and division, but its role in chromosome segregation during mitosis is only poorly understood. The Dis3 ribonuclease is a key component of the RNA-processing exosome complex. Previous isolation of the dis3-54 cold-sensitive mutant of fission yeast Schizosaccharomyces pombe suggested that Dis3 is also required for correct chromosome segregation. We show here that the progression of mitosis is arrested in dis3-54, and that segregation of the chromosomes is blocked by activation of the mitotic checkpoint control. This block is dependent on the Mad2 checkpoint protein. Double mutant and inhibitor analyses revealed that Dis3 is required for correct kinetochore formation and function, and that this activity is monitored by the Mad2 checkpoint. Dis3 is a member of the highly conserved RNase II family and is known to be an essential subunit of the exosome complex. The dis3-54 mutation was found to alter the RNaseII domain of Dis3, which caused a reduction in ribonuclease activity in vitro. This was associated with loss of silencing of an ura4(+) reporter gene inserted into the outer repeats (otr) and central core (cnt and imr) regions of the centromere. On the other hand, centromeric siRNA maturation and formation of the RITS RNAi effector complex was normal in the dis3-54 mutant. Micrococcal nuclease assay also suggested the overall chromatin structure of the centromere was not affected in dis3-54 mutant. RNase activity of Dis3, a core subunit of exosome, was found to be required for proper kinetochore formation and establishment of kinetochore-microtubule interactions. Moreover, Dis3 was suggested to contribute to kinetochore formation through an involvement in heterochromatic silencing at both outer centromeric repeats and within the central core region. This activity is likely monitored by the mitotic checkpoint, and distinct from that of RNAi-mediated heterochromatin formation directly targeting outer centromeric repeats.