NanGIR1 is a catalytic element inserted in the P6 loop of a group I intron (NanGIR2) in the small subunit rRNA precursor of the protist Naegleria andersoni [Einvik, C., Decatur, W. A., Embley, T. M., Vogt, V. M., and Johansen, S. (1997) RNA 3, 710-720]. It catalyzes site-specific hydrolysis at an internal processing site (IPS) after a G residue that immediately follows the P9 stem-loop. Functional and structural analyses were initiated to compare NanGIR1 to group I introns that carry out self-splicing. Chemical modification and site-directed mutagenesis studies showed that NanGIR1 shares many structural elements with other group I introns, but also contains a pseudoknot (P15), which is important for catalytic activity. Deletion analysis revealed the boundaries of the minimum self-cleaving unit (178 nucleotides). The rate of self-cleavage was measured as a function of mono- and divalent ion concentration, temperature, and pH. The reaction at the IPS yields 5'-phosphate and 3'-hydroxyl termini, requires Mg2+or Mn2+ ions, and is first-order in [OH-] between pH 5.0 and 8.5. The latter results suggest that the nucleophile in the reaction is hydroxide or possibly a Mg2+-coordinated hydroxide. With a second-order rate constant of 1 x 10(5) min-1 M-1, the self-cleavage reaction of NanGIR1 is 2 orders of magnitude faster than a similar site-specific hydrolysis reaction of the circular form of the Tetrahymena group I intron.