Rpp20 and Rpp25 are two key subunits of the human endoribonucleases RNase P and MRP. Formation of an Rpp20-Rpp25 complex is critical for enzyme function and sub-cellular localization. We present the first detailed in vitro analysis of their conformational properties, and a biochemical and biophysical characterization of their mutual interaction and RNA recognition. This study specifically examines the role of the Rpp20/Rpp25 association in the formation of the ribonucleoprotein complex. The interaction of the individual subunits with the P3 arm of the RNase MRP RNA is revealed to be negligible whereas the 1:1 Rpp20:Rpp25 complex binds to the same target with an affinity of the order of nM. These results unambiguously demonstrate that Rpp20 and Rpp25 interact with the P3 RNA as a heterodimer, which is formed prior to RNA binding. This creates a platform for the design of future experiments aimed at a better understanding of the function and organization of RNase P and MRP. Finally, analyses of interactions with deletion mutant proteins constructed with successively shorter N- and C-terminal sequences indicate that the Alba-type core domain of both Rpp20 and Rpp25 contains most of the determinants for mutual association and P3 RNA recognition.