An RNA homologous to U2 RNA and a single copy gene encoding the RNA homolog have been characterized in the microsporidian, Vairimorpha necatrix. The RNA which is 165 nucleotides in length possesses significant similarity to U2 RNA, particularly in the 5' half of the molecule. The U2 homolog contains the highly conserved GUAGUA branch point binding sequence seen in all U2 RNAs except those of the trypanosomes. A U2 RNA sequence element implicated in a U2:U6 RNA intermolecular pairing is also present in the U2 homolog. The V.necatrix U2 RNA homolog differs at positions previously found to be invariant in U2 RNAs and appears to lack an Sm binding site sequence, The RNA can be folded into a secondary structure possessing three of the four principal stem-loops proposed for the consensus U2 RNA structure. A cis-diol containing cap structure is present at the 5' end of the U2 homolog. Unlike the cap structures seen in U-snRNAs and mRNAs it is neither 2,2,7-trimethylguanosine, gamma-monomethyl phosphate, nor 7-methylguanosine.