Pre-mRNA processing occurs by assembly of splicing factors on the substrate to form the spliceosome followed by two consecutive RNA cleavage-ligation reactions. The Prp2 protein hydrolyzes ATP and is required for the first reaction (Yean SL, Lin RJ, 1991, Mol Cell Biol 11:5571-5577; Kim SH, Smith J, Claude A, Lin RJ, 1992, EMBO J 11:2319-2326). The Saccharomyces cerevisiae SPP2 gene was previously identified as a high-copy suppressor of temperature-sensitive prp2 mutants (Last RL, Maddock JR, Woolford JL Jr, 1987, Genetics 117:619-631). We have characterized the function of Spp2p in vivo and in vitro. Spp2p is an essential protein required for the first RNA cleavage reaction in vivo. Depletion of Spp2p from yeast cells results in accumulation of unspliced pre-mRNAs. A temperature-sensitive spp2-1 mutant accumulates pre-mRNAs in vivo and is unable to undergo the first splicing reaction in vitro. However, spliceosomal complexes are assembled in extracts prepared from the mutant. We show that Spp2p function is required after spliceosome assembly but prior to the first reaction. Spp2p associates with the spliceosome before the first RNA cleavage reaction and is likely to be released from the spliceosome following ATP hydrolysis by Prp2p. The Prp2 and Spp2 proteins are capable of physically interacting with each other. These results suggest that Spp2p interacts with Prp2p in the spliceosome prior to the first cleavage-ligation reaction. Spp2p is the first protein that has been found to interact with a DEAD/H box splicing factor.