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 pri-miRNAs, we here reconstitute human Microprocessor with purified recombinant proteins. We find that Microprocessor is an ∼364 kDa heterotrimeric complex of one DROSHA and two DGCR8 molecules. Together with a 23-amino acid peptide from DGCR8, DROSHA constitutes a minimal functional core. DROSHA serves as a "ruler" by measuring 11 bp from the basal ssRNA-dsRNA junction. DGCR8 interacts with the stem and apical elements through its dsRNA-binding domains and RNA-binding heme domain, respectively, allowing efficient and accurate processing. DROSHA and DGCR8, respectively, recognize the basal UG and apical UGU motifs, which ensure proper orientation of the complex. These findings clarify controversies over the action mechanism of DROSHA and allow us to build a general model for pri-miRNA processing.