We have generated mutants in Xenopus U8 RNA, a nucleolar snRNA required for the maturation of 5.8S and 28S rRNAs, to identify sequences and structural domains essential for RNA stability, particle assembly, and function of the U8 RNP. Activity of the mutants was assayed by microinjection of in vitro-synthesized U8 RNAs into the cytoplasm of Xenopus oocytes. Most of the mutant RNAs were stable, bound fibrillarin, a protein common to several of the nucleolar-specific snRNPs, and became hypermethylated. Although hypermethylation of the 5' cap of U8 RNA and fibrillarin binding can occur in either the cytoplasmic or nuclear compartment of Xenopus oocytes, neither is required for nuclear import. We find that the trimethylguanosine cap, although present on the endogenous U8 RNA, is not essential for stability, particle assembly, or functioning of U8 in the coordinate processing of pre-rRNA at sites 3' of 28S and 5' of 5.8S RNA. Several conserved single- and double-stranded sequences within the 5' domain of U8 RNA are essential for function.