Ribonuclease III (RNaseIII) is responsible for processing and maturation of RNA precursors into functional rRNA, mRNA and other small RNA. In contrast to bacterial and yeast cells, higher eukaryotes contain at least three classes of RNaseIII, including class IV or dicer-like proteins. Here, we describe the functional characterization of AtRTL2, an Arabidopsis thaliana RNaseIII-like protein that belongs to a small family of genes distinct from the dicer family. We demonstrate that AtRTL2 is required for 3external transcribed spacer (ETS) cleavage of the pre-rRNA in vivo. AtRTL2 localizes in the nucleus and cytoplasm, a nuclear export signal (NES) in the N-terminal sequence probably controlling AtRTL2 cellular localization. The modeled 3D structure of the RNaseIII domain of AtRTL2 is similar to the bacterial RNaseIII domain, suggesting a comparable catalytic mechanism. However, unlike bacterial RNaseIII, the AtRTL2 protein forms a highly salt-resistant homodimer that is only disrupted on treatment with DTT. These data indicate that AtRTL2 may use a dimeric mechanism to cleave double-stranded RNA, but unlike bacterial or yeast RNase III proteins, AtRTL2 forms homodimers through formation of disulfide bonds, suggesting that redox conditions may operate to regulate the activity of RNaseIII