Many analyses have examined subnucleolar structures in eukaryotic cells, but the relationship between morphological structures, pre-rRNA processing, and ribosomal particle assembly has remained unclear. Using a visual assay for export of the 60S ribosomal subunit, we isolated a ts-lethal mutation, rix9-1, which causes nucleolar accumulation of an Rpl25p-eGFP reporter construct. The mutation results in a single amino acid substitution (F176S) in Rlp7p, an essential nucleolar protein related to ribosomal protein Rpl7p. The rix9-1 (rlp7-1) mutation blocks the late pre-RNA cleavage at site C2 in ITS2, which separates the precursors to the 5.8S and 25S rRNAs. Consistent with this, synthesis of the mature 5.8S and 25S rRNAs was blocked in the rlp7-1 strain at nonpermissive temperature, whereas 18S rRNA synthesis continued. Moreover, pre-rRNA containing ITS2 accumulates in the nucleolus of rix9-1 cells as revealed by in situ hybridization. Finally, tagged Rlp7p was shown to associate with a pre-60S particle, and fluorescence microscopy and immuno-EM localized Rlp7p to a subregion of the nucleolus, which could be the granular component (GC). All together, these data suggest that pre-rRNA cleavage at site C2 specifically requires Rlp7p and occurs within pre-60S particles located in the GC region of the nucleolus.