Replication-dependent histone mRNAs end in a highly conserved 26-nt stem-loop structure. The stem-loop binding protein (SLBP), an evolutionarily conserved protein with no known homologs, interacts with the stem-loop in both the nucleus and cytoplasm and mediates nuclear-cytoplasmic transport as well as 3'-end processing of the pre-mRNA by the U7 snRNP. Here, we examined the affinity and specificity of the SLBP-RNA interaction. Nitrocellulose filter-binding experiments showed that the apparent equilibrium dissociation constant (Kd) between purified SLBP and the stem-loop RNA is 1.5 nM. Binding studies with a series of stem-loop variants demonstrated that conserved residues in the stem and loop, as well as the 5' and 3' flanking regions, are required for efficient protein recognition. Deletion analysis showed that 3 nt 5' of the stem and 1 nt 3' of the stem contribute to the binding energy. These data reveal that the high affinity complex between SLBP and the RNA involves sequence-specific contacts to the loop and the top of the stem, as well the base of the stem and its immediate flanking sequences. Together, these results suggest a novel mode of protein-RNA recognition that forms the core of a ribonucleoprotein complex central to the regulation of histone gene expression.