The motor neuron disease spinal muscular atrophy (SMA) is caused by reduced levels of functional survival of motor neurons (SMN) protein. Previous studies have shown that SMN binds to the SMN-interacting protein SIP1 and mediates the assembly of spliceosomal U snRNPs in the cytoplasm. In addition, a nuclear function for SMN in pre-mRNA splicing has recently been proposed. Here, we describe the analysis of the Schizo-saccharomyces pombe protein Yab8p and provide evidence that it is structurally and functionally related to SMN found in higher eukaryotes. We show that Yab8p interacts via its N-terminus with a novel protein termed Yip1p. Importantly, Yip1p exhibits homology to SIP1, and the mode of binding to Yab8p is remarkably similar to the SMN-SIP1 interaction. Hence, Yip1p is likely to be the homologue of SIP1 in S.pombe. Yab8p and Yip1p localize predominantly in the nucleus. Genetic studies demonstrate that Yab8p is essential for viability. Strikingly, suppression of YAB8 expression in a conditional knock-out strain causes nuclear accumulation of poly(A) mRNA and inhibition of splicing. These data identify Yab8p as a novel factor involved in splicing and suggest that Yab8p exerts a function similar or identical to the nuclear pool of SMN. Our studies provide a model system to study the cellular function of SMN in yeast, and should help in understanding the molecular events leading to SMA.