PSI is an RNA-binding protein involved in repressing splicing of the P element third intron in Drosophila somatic cell extracts. PSI produced in bacteria restores splicing inhibition to an extract relieved of inhibitory activity, indicating that PSI plays a direct role in somatic inhibition. Sequence analysis of cDNAs encoding PSI reveals three KH RNA-binding domains, a conserved motif also found in the yeast splicing regulator MER1. Notably, PSI is expressed highly in somatic embryonic nuclei but is undetectable in germ-line cells. In contrast, hrp48, another protein implicated in somatic inhibition, is found in the nucleus and cytoplasm of both tissues. The splicing inhibitory properties and soma-specific expression of PSI may be sufficient to explain the germ-line-specific transposition of P elements.