Collaborator of alternative reading frame protein (CARF) associates directly with ARF, p53, and/or human double minute 2 protein (HDM2), a ubiquitin-protein ligase, without cofactors and regulates cell proliferation by forming a negative feedback loop. Although ARF, p53, and HDM2 also participate in the regulation of ribosome biogenesis, the involvement of CARF in this process remains unexplored. In this study, we demonstrate that CARF associates with 5'-3' exoribonuclease 2 (XRN2), which plays a major role in both the maturation of rRNA and the degradation of a variety of discarded pre-rRNA species. We show that overexpression of CARF increases the localization of XRN2 in the nucleoplasm and a concomitant suppression of pre-rRNA processing that leads to accumulation of the 5' extended from of 45S/47S pre-rRNA and 5'-01, A0-1 and E-2 fragments of pre-rRNA transcript in the nucleolus. This was also observed upon XRN2 knockdown. Knockdown of CARF increased the amount of XRN2 in the nucleolar fraction as determined by cell fractionation and by immnocytochemical analysis. These observations suggest that CARF regulates early steps of pre-rRNA processing during ribosome biogenesis by controlling spatial distribution of XRN2 between the nucleoplasm and nucleolus.