Proteins of the Lsm family, including eukaryotic Sm proteins and bacterial Hfq, are key players in RNA metabolism. Little is known about the archaeal homologues of these proteins. Therefore, we characterized the Lsm protein from the haloarchaeon Haloferax volcanii using in vitro and in vivo approaches. H. volcanii encodes a single Lsm protein, which belongs to the Lsm1 subfamily. The lsm gene is co-transcribed and overlaps with the gene for the ribosomal protein L37e. Northern blot analysis shows that the lsm gene is differentially transcribed. The Lsm protein forms homoheptameric complexes and has a copy number of 4000 molecules/cell. In vitro analyses using electrophoretic mobility shift assays and ultrasoft mass spectrometry (laser-induced liquid bead ion desorption) showed a complex formation of the recombinant Lsm protein with oligo(U)-RNA, tRNAs, and an small RNA. Co-immunoprecipitation with a FLAG-tagged Lsm protein produced in vivo confirmed that the protein binds to small RNAs. Furthermore, the co-immunoprecipitation revealed several protein interaction partners, suggesting its involvement in different cellular pathways. The deletion of the lsm gene is viable, resulting in a pleiotropic phenotype, indicating that the haloarchaeal Lsm is involved in many cellular processes, which is in congruence with the number of protein interaction partners.