Production of small ribosomal subunits initially requires the formation of a 90S precursor followed by an enigmatic process of restructuring into the primordial pre-40S subunit. We elucidate this process by biochemical and cryo-electron microscopy analysis of intermediates along this pathway in yeast. First, the remodeling RNA helicase Dhr1 engages the 90S pre-ribosome, followed by Utp24 endonuclease-driven RNA cleavage at site A(1), thereby separating the 5'-external transcribed spacer (ETS) from 18S ribosomal RNA. Next, the 5 '-ETS and 90S assembly factors become dislodged, but this occurs sequentially, not en bloc. Eventually, the primordial pre-40S emerges, still retaining some 90S factors including Dhr1, now ready to unwind the final small nucleolar U3-18S RNA hybrid. Our data shed light on the elusive 90S to pre-40S transition and clarify the principles of assembly and remodeling of large ribonucleoproteins.