In yeast and animals, SM-like (LSM) proteins typically exist as heptameric complexes and are involved in different aspects of RNA metabolism. Eight LSM proteins, LSM1 to 8, are highly conserved and form two distinct heteroheptameric complexes, LSM1-7 and LSM2-8,that function in mRNA decay and splicing, respectively. A search of the Arabidopsis thaliana genome identifies 11 genes encoding proteins related to the eight conserved LSMs, the genes encoding the putative LSM1, LSM3, and LSM6 proteins being duplicated. Here, we report the molecular and functional characterization of the Arabidopsis LSM gene family. Our results show that the 11 LSM genes are active and encode proteins that are also organized in two different heptameric complexes. The LSM1-7 complex is cytoplasmic and is involved in P-body formation and mRNA decay by promoting decapping. The LSM2-8 complex is nuclear and is required for precursor mRNA splicing through U6 small nuclear RNA stabilization. More importantly, our results also reveal that these complexes are essential for the correct turnover and splicing of selected development-related mRNAs and for the normal development of Arabidopsis. We propose that LSMs play a critical role in Arabidopsis development by ensuring the appropriate development-related gene expression through the regulation of mRNA splicing and decay.