Component of the cleavage and polyadenylation specificity factor (CPSF) complex that plays a key role in pre-mRNA 3'-end formation, recognizing the AAUAAA signal sequence and interacting with poly(A) polymerase and other factors to bring about cleavage and poly(A) addition. Has endonuclease activity, and functions as mRNA 3'-end-processing endonuclease. Also involved in the histone 3'-end pre-mRNA processing. U7 snRNP-dependent protein that induces both the 3' endoribonucleolytic cleavage of histone pre-mRNAs and acts as a 5' to 3' exonuclease for degrading the subsequent downstream cleavage product (DCP) of mature histone mRNAs. Cleavage occurs after the 5'-ACCCA-3' sequence in the histone pre-mRNA leaving a 3'hydroxyl group on the upstream fragment containing the stem loop (SL) and 5' phosphate on the downstream cleavage product (DCP) starting with CU nucleotides. The U7-dependent 5' to 3' exonuclease activity is processive and degrades the DCP RNA substrate even after complete removal of the U7-binding site. Binds to the downstream cleavage product (DCP) of histone pre-mRNAs and the cleaved DCP RNA substrate in a U7 snRNP dependent manner. Required for the selective processing of microRNAs (miRNAs) during embryonic stem cell differentiation via its interaction with ISY1 (PubMed:26255770, PubMed:29804889). Required for entering/progressing through S-phase of the cell cycle (By similarity). Required for the biogenesis of all miRNAs from the pri-miR-17-92 primary transcript except miR-92a (PubMed:26255770). Only required for the biogenesis of miR-290 and miR-96 from the pri-miR-290-295 and pri-miR-96-183 primary transcripts, respectively (PubMed:29804889). Binds 2 Zn(2+) ions per subunit. Component of the cleavage and polyadenylation specificity factor (CPSF) complex, composed of CPSF1, CPSF2, CPSF3, CPSF4 and FIP1L1. Interacts with CPSF2, CSTF2 and SYMPK. Interacts with TUT1; the interaction is direct and mediates the recruitment of the CPSF complex on the 3'UTR of pre-mRNAs. Interacts with WDR33 (By similarity). Interacts with ZC3H3 (PubMed:16115198). Interacts with ISY1; this interaction is in an RNA independent manner (PubMed:26255770). Interacts with the microprocessor complex subunits DGCR8 and DROSHA; this interaction is in an RNA dependent manner (PubMed:26255770). Sumoylated on Lys-462, Lys-465 and Lys-545, preferentially by SUMO3. Belongs to the metallo-beta-lactamase superfamily. RNA-metabolizing metallo-beta-lactamase-like family. CPSF3 subfamily.