The initiator RNAs of mammalian Okazaki fragments are thought to be removed by RNase HI and the 5-3 f lap endonuclease (FEN1). Earlier evidence indicated that the cleavage site of RNase HI is 5 of the last ribonucleotide at the RNA-DNA junction on an Okazaki substrate. In current work, highly purified calf RNase HI makes this exact cleavage in Okazaki fragments containing mismatches that distort the hybrid structure of the heteroduplex. Furthermore, even fully unannealed Okazaki fragments were cleaved. Clearly, the enzyme recognizes the transition from RNA to DNA on a single-stranded substrate and not the RNA͞DNA heteroduplex structure. We have named this junction RNase activity. This activity exactly comigrates with RNase HI activity during purification strongly suggesting that both activities reside in the same enzyme. After junction cleavage, FEN1 removes the remaining ribonucleotide. Because FEN1 prefers a substrate with a single-stranded 5-f lap structure, the single-stranded activity of junction RNase suggests that Okazaki fragments are displaced to form a 5-tail prior to cleavage by both nucleases. RNase HI is involved in the removal of the initiator RNA primers of Okazaki fragments, an essential step during chromosomal DNA replication of the lagging strand (10). These RNAs, 7-14 nucleotides in length, are generated by the primase activity of DNA polymerase ␣ (pol ␣) and prime DNA synthesis of both the leading and lagging strands at the DNA replication fork. The pol activity of this same enzyme then extends each primer with deoxynucleotides. Pol ␣ is thought to be replaced by pol ␦ that continues synthesis to the next downstream fragment. There is considerable evidence that the RNA is removed by the combined action of RNase HI and a 5Ј to 3Ј exo͞endonuclease (11-13). This latter enzyme has been called flap endonuclease (FEN1) (14) in mammals and is known as RAD two homolog (RTH1) and RAD27 in Saccharomyces cerevisiae (15). Removal of the RNA is required before DNA synthesis and ligation can complete the replication process.The exact functions of RNase HI in DNA replication have been the subject of several studies. Drosophila RNase HI was found to stimulate synthesis by pol ␣ (4). In addition, RNases H from yeast and calf thymus (3, 6) associate with and stimulate their cognate pol ␣. These observations suggest that RNase HI and pol ␣ form a complex in vivo capable of synthesis and removal of RNA primers. Reconstitution assays with both mouse cell and SV40 replication proteins require RNase HI for the maturation of lagging strands in vitro (12, 13).Although cleavage of long RNA͞DNA hybrids is random, cleavage of certain substrates is clearly structure specific. Eder et al. (16) found that when a series of ribonucleotides were followed by a 3Ј DNA segment and annealed to DNA to form a duplex, human RNase HI preferentially cleaved to leave a DNA segment with a 5Ј monoribonucleotide. In reactions reconstituting Okazaki fragment processing, RNase HI from calf thymus similarly cleaved the RNA-DNA stra...