Trimethyl capping of U2 snRNA has been studied using U2 genes with mutations located in either the 5' flanking or the coding region. A monomethyl (7-methylguanosine) cap is added to U2 cotranscriptionally, trimethylation being posttranscriptional. The immediate 5' flanking sequences have no influence on trimethylation; furthermore, trimethylation is not affected by changing the position and sequence of the cap site. The efficiency of trimethylation is reduced by deleting the Sm binding site from U2 RNA, but it is not altered by other mutations in the coding sequence. Insertion of artificial Sm binding sites either into a mutant U2 from which the natural binding site has been deleted or into SP6 transcripts generated in vitro allows these RNAs to become trimethylated. The trimethylase activity in Xenopus laevis oocytes is cytoplasmic.