A class of small nucleolar RNAs (snoRNAs) is encoded in introns of pro
tein-coding genes. The U16 snoRNA belongs to this class; it is encoded
in the third intron of the Xenopus laevis (Xl) L1 ribosomal protein e
ncoding gene and is released from the pre-mRNA by processing both in v
ivo and in vitro systems. In this paper, we show that in close proximi
ty to the U16 snoRNA processing sites, sequences displaying self-cleav
ing activity are present. These elements are conserved in the two copi
es of the Xl L1 and in the single copy of the X. tropicalis L1. The ca
talytic activity corresponds to that already described for the minimal
hairpin ribozyme [Dange et al., Science 242 (1990) 585-588]; it is Mn
2+-dependent, produces 2'-3' cyclic phosphate and 5'-OH termini and co
mprises an essential GAAA element. Here we show that the 2'-OH group o
f the G residue is essential for catalysis.