We have previously shown that ISG20, an interferon (IFN)-induced gene, encodes a 3' to 5' exoribonuclease member of the DEDD superfamily of exonucleases. ISG20 specifically degrades single-stranded RNA. In this report, using immunofluorescence analysis, we demonstrate that in addition to a diffuse cytoplasmic and nucleoplasmic localization, the endogenous ISG20 protein was present in the nucleus both in the nucleolus and in the Cajal bodies (CBs). In addition, we show that the ectopic expression of the CBs signature protein, coilin, fused to the red fluorescent protein (coilin-dsRed) increased the number of nuclear dots containing both ISG20 and coilin-dsRed. Using electron microcopy analysis, ISG20 appeared principally concentrated in the dense fibrillar component of the nucleolus, the major site for rRNA processing. We also present evidences that ISG20 was associated with survival of motor neuron (SMN)-containing macromolecular nuclear complexes required for the biogenesis of various small nuclear ribonucleoproteins. Finally, we demonstrate that ISG20 was associated with U1 and U2 snRNAs, and U3 snoRNA. The accumulation of ISG20 in the CBs after IFN treatment strongly suggests its involvement in a new route for IFN-mediated inhibition of protein synthesis by modulating snRNA and rRNA maturation.