We have identified a cap binding protein in a HeLa nuclear extract using a gel mobility shift assay probed with capped RNA. Subcellular fractionation of HeLa cells revealed that the majority (about 70%) of the cap binding activity is present in the nuclear extract, about 20% is in the cytoplasmic S100 fraction, and almost none in the ribosome-high salt wash fraction, indicating that the protein in active form localizes mainly in the nuclei. Competition experiments with various cap analogues showed that the G(5')ppp(5')N-blocking structure as well as the methyl residue at the N7 position of the blocking guanosine is important for the binding of this protein, and that the trimethylguanosine cap structure which exists at the 5' termini of many snRNAs is not recognized by this protein. Immunoprecipitation experiments using various anti-snRNP antibodies suggested that this protein is partially associated with U2 snRNP. We purified this protein to near homogeneity from a HeLa nuclear extract by several chromatographic procedures including capped RNA-Sepharose chromatography. The purified protein shows molecular weight of 80 kilodaltons, as judged by SDS gel electrophoresis, and binds specifically to the cap structure.