A longer-than-unit-length transcript of potato spindle tuber viroid is correctly processed in a potato nuclear extract only if the central conserved region is folded into a multi-helix junction containing at least one GNRA tetraloop-hairpin. The cleavage-ligation site between G95 and G96 was mapped with S1 nuclease and primer extension. The structural motifs involved in the processing mechanism were analysed by UV crosslinking, chemical mapping, phylogenetic comparison and thermodynamic calculations. For processing, the first cleavage occurs within the stem of the GNRA tetraloop; a local conformational change switches the tetraloop motif into a loop E motif, stabilizing a base-paired 5' end. The second cleavage yields unit-length linear intermediates, whose 3' end is also base-paired and most probably coaxially stacked in optimum juxtaposition to the 5' end. They are ligated to mature circles autocatalytically, with low efficiency, or enzymatically, with high efficiency.