Double-stranded RNA-binding protein involved in RNA-mediated post-transcriptional gene silencing (PTGS). Functions in the microRNAs (miRNAs) biogenesis by assisting DICER-LIKE 1 (DCL1) in the accurate processing from primary miRNAs (pri-miRNAs) to miRNAs in the nucleus. Forms a complex with SERRATE (SE) and DCL1 to promote accurate processing of pri-miRNAs by DCL1. Binds and assist DCL1 for accurate processing of precursor miRNAs (pre-miRNA). Indirectly involved in the production of trans-acting small interfering RNAs (ta-siRNAs) derived from the TAS1, TAS2 or TAS3 endogenous transcripts by participating in the production of their initiating miRNAs. Involved with argonaute 1 (AGO1) in the guide strand selection from miRNA duplexes, presumably by directional loading of the miRNA duplex (guide stand and passenger strand) onto the RNA-induced silencing complex (RISC) for passenger strand degradation. Does not participate in sense transgene-induced post-transcriptional gene silencing (S-PTGS). Involved in several plant development aspects and response to hormones through its role in miRNAs processing. Homodimer. Heterodimer with DRB2, DRB4 or DRB5. Interacts with SE and DCL1 (PubMed:15821876, PubMed:16428603, PubMed:16889646, PubMed:20462493). Interacts with RCF3, RS40 and RS41 (PubMed:26227967). Localizes to nuclear dicing body (also named D body), a nuclear body distributed throughout the nucleoplasm and involved in miRNA processing. Expressed in rosette and cauline leaves, stems, roots, flowers and siliques. By abscisic acid (ABA). The dsRNA binding domains (dsRBDs) 1 and 2 are sufficient for the function in miRNA precursors processing and mature miRNA generation. Short plant, delayed flowering, leaf hyponasty, reduced fertility, decreased rate of root growth, altered root gravitropic response, decreased sensitivity to auxin and cytokinin and hypersensitivity to abscisic acid (ABA). Reduction of several miRNA accumulation. Plants overexpressing HYL1 show decreased stability of transcripts targeted by miRNAs.