Processing of the 3 terminus of tRNA in many organisms is carried out by an endoribonuclease termed RNase Z or 3-tRNase, which cleaves after the discriminator nucleotide to allow addition of the universal -CCA sequence. In some eubacteria, such as Escherichia coli, the -CCA sequence is encoded in all known tRNA genes. Nevertheless, an RNase Z homologue (RNase BN) is still present, even though its action is not needed for tRNA maturation. To help identify which RNA molecules might be potential substrates for RNase BN, we carried out a detailed examination of its specificity and catalytic potential using a variety of synthetic substrates. We show here that RNase BN is active on both double-and single-stranded RNA but that duplex RNA is preferred. The enzyme displays a profound base specificity, showing no activity on runs of C residues. RNase BN is strongly inhibited by the presence of a 3-CCA sequence or a 3-phosphoryl group. Digestion by RNase BN leads to 3-mers as the limit products, but the rate slows on molecules shorter than 10 nucleotides in length. Most interestingly, RNase BN acts as a distributive exoribonuclease on some substrates, releasing mononucleotides and a ladder of digestion products. However, RNase BN also cleaves endonucleolytically, releasing 3 fragments as short as 4 nucleotides. Although the presence of a 3-phosphoryl group abolishes exoribonuclease action, it has no effect on the endoribonucleolytic cleavages. These data suggest that RNase BN may differ from other members of the RNase Z family, and they provide important information to be considered in identifying a physiological role for this enzyme.Maturation of tRNA precursors requires the removal of 5Ј and 3Ј precursor-specific sequences to generate the mature, functional tRNA (1). In eukaryotes, archaea, and certain eubacteria, the 3Ј-processing step is carried out by an endoribonuclease termed RNase Z or 3Ј-tRNase (2-6). However, in some bacteria, such as Escherichia coli, removal of 3Ј extra residues is catalyzed by any of a number of exoribonucleases (7, 8). The major determinant for which mode of 3Ј-processing is utilized appears to be whether or not the universal 3Ј-terminal CCA sequence is encoded (2, 9). Thus, for those tRNA precursors in which the CCA sequence is absent, endonucleolytic cleavage by RNase Z right after the discriminator nucleotide generates a substrate for subsequent CCA addition by tRNA nucleotidyltransferase (1-3, 10). In view of this role for RNase Z in 3Ј-tRNA maturation, it is surprising that E. coli, an organism in which the CCA sequence is encoded in all tRNA genes (2), nevertheless contains an RNase Z homologue (11), because its action would appear not to be necessary. In fact, the physiological function of this enzyme in E. coli remains unclear, because mutants lacking this protein have no obvious growth phenotype (12). Hence, there is considerable interest in understanding the enzymatic capabilities of this enzyme.The E. coli RNase Z homologue initially was identified as a zinc phosphodiesterase (11) ...