Nucleolar localization of box C/D small nucleolar (sno) RNAs requires the box C/D motif and, in vertebrates, involves transit through Cajal bodies (CB). We report that in yeast, overexpression of a box C/D reporter leads to a block in the localization pathway with snoRNA accumulation in a specific sub-nucleolar structure, the nucleolar body (NB). The human survival of motor neuron protein (SMN), a marker of gems/CB, specifically localizes to the NB when expressed in yeast, supporting similarities between these structures. Box C/D snoRNA accumulation in the NB was decreased by mutation of Srp40 and increased by mutation of Nsr1p, two related nucleolar proteins that are homologous to human Nopp140 and nucleolin, respectively. Box C/D snoRNAs also failed to accumulate in the NB, and became delocalized to the nucleoplasm, upon depletion of any of the core snoRNP proteins, Nop1p/fibrillarin, Snu13p, Nop56p and Nop5p/Nop58p. We conclude that snoRNP assembly occurs either in the nucleoplasm, or during transit of snoRNAs through the NB, followed by routing of the complete snoRNP to functional sites of ribosome synthesis.