Most histone precursor mRNAs (pre-mRNAs) in metazoans are matured by 3'-end cleavage directed by the U7 small nuclear ribonucleoprotein (snRNP). RNA functional groups necessary for in vivo assembly and activity of the U7 snRNP were examined by nucleotide-analog interference mapping and mutagenesis using a chimeric mouse histone H4 pre-mRNA-U7 snRNA construct that is cleaved in cis in Xenopus laevis oocytes. Assembly of the unique U7 Sm protein core is rate limiting for processing in vivo and requires four conserved nucleotides within the U7 Sm-binding site, as well as the correct positioning and size of the U7 terminal stem-loop structure. To our surprise, pseudouridine substitution revealed a requirement for backbone flexibility at a particular position within the U7 Sm site, providing in vivo biochemical evidence that an unusual C2'-endo sugar conformation is necessary for assembly of the Sm ring.