Polycistronic pre-mRNAs from Caenohabditis elegans operons are processed by internal cleavage and polyadenylation to create 3' ends of mature mRNAs. This is accompanied by trans-splicing with SL2 approximately 100 nucleotides downstream of the 3' end formation sites to create the 5' ends of downstream mRNAs. SL2 trans-splicing depends on a U-rich element (Ur), located approximately 70 nucleotides upstream of the trans-splice site in the intercistronic region (ICR), as well as a functional 3' end formation signal. Here we report the existence of a novel gene-length RNA, the Ur-RNA, starting just upstream of the Ur element. The expression of Ur-RNA is dependent on 3' end formation as well as on the presence of the Ur element, but does not require a trans-splice site. The Ur-RNA is not capped, and alteration of the location of the Ur element in either the 5' or 3' direction alters the location of the 5' end of the Ur-RNA. We propose that a 5' to 3' exonuclease degrades the precursor RNA following cleavage at the poly(A) site, stopping when it reaches the Ur element, presumably attributable to a bound protein. Part of the function of this protein can be performed by the MS2 coat protein. Recruitment of coat protein to the ICR in the absence of the Ur element results in accumulation of an RNA equivalent to Ur-RNA, and restores trans-splicing. Only SL1, however, is used. Therefore, coat protein is sufficient for blocking the exonuclease and thereby allowing formation of a substrate for trans-splicing, but it lacks the ability to recruit the SL2 snRNP. Our results also demonstrate that MS2 coat protein can be used as an in vivo block to an exonuclease, which should have utility in mRNA stability studies.