MicroRNA (miRNA) maturation is initiated by Microprocessor composed of RNase III DROSHA and its cofactor DGCR8, whose fidelity is critical for generation of functional miRNAs. To understand how Microprocessor recognizes primary miRNAs (pri-miRNAs), we reconstitute human Microprocessor with purified recombinant proteins. We find the ruler fuction of DROSHA and specify the accessary roles of DGCR8 domains by in vitro pri-miRNA processing assays. Furthermore, we solve the atomic structure of DROSHA in complex with the C-terminal helix of DGCR8. The overall structure of DROSHA is unexpectedly similar to that of DICER, suggesting that DROSHA may have evolved from an ancestral DICER. DROSHA however exhibits several unique features, such as a kinked conformation, a long DROSHA-specific insertion, and two zinc-finger motifs, which together contribute to substrate recognition and processing. In addition, we identify two DGCR8 binding sites on DROSHA which provide a key information to build the heterotrimeric Microprocessor model. These findings clarify long standing controversies over the Microprocessing mechanism and allow us to build a general model for pri-miRNA processing