The Microprocessor, comprising the RNase III Drosha and the double-stranded RNA binding protein DGCR8, is essential for microRNA (miRNA) biogenesis. In the miRNA processing pathway certain hairpin structures within primary miRNA (pri-miRNA) transcripts are specifically cleaved by the Microprocessor to release approximately 60-70-nucleotide precursor miRNA (pre-miRNA) intermediates. Although both Drosha and DGCR8 are required for Microprocessor activity, the mechanisms regulating the expression of these proteins are unknown. Here we report that the Microprocessor negatively regulates DGCR8 expression. Using in vitro reconstitution and in vivo studies, we demonstrate that a hairpin, localized in the 5' untranslated region (5'UTR) of DGCR8 mRNA, is cleaved by the Microprocessor. Accordingly, knockdown of Drosha leads to an increase in DGCR8 mRNA and protein levels in cells. Furthermore, we found that the DGCR8 5'UTR confers Microprocessor-dependent repression of a luciferase reporter gene in vivo. Our results uncover a novel feedback loop that regulates DGCR8 levels.