Hexanucleotide repeat expansion in the C9ORF72 gene results in production of dipeptide repeat (DPR) proteins that may disrupt pre-mRNA splicing in amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD) patients. At present, the mechanisms underlying this mis-splicing are not understood. Here, we show that addition of proline-arginine (PR) and glycine-arginine (GR) toxic DPR peptides to nuclear extracts blocks spliceosome assembly and splicing, but not other types of RNA processing. Proteomic and biochemical analyses identified the U2 small nuclear ribonucleoprotein particle (snRNP) as a major interactor of PR and GR peptides. In addition, U2 snRNP, but not other splicing factors, mislocalizes from the nucleus to the cytoplasm both in C9ORF72 patient induced pluripotent stem cell (iPSC)-derived motor neurons and in HeLa cells treated with the toxic peptides. Bioinformatic studies support a specific role for U2-snRNP-dependent mis-splicing in C9ORF72 patient brains. Together, our data indicate that DPR-mediated dysfunction of U2 snRNP could account for as much as approximately 44% of the mis-spliced cassette exons in C9ORF72 patient brains.