In vitro selection was used to sample SnRNA-related sequences for ribozyme activities, and several 2',5'-branch-forming ribozymes were isolated. One such ribozyme is highly dependent upon an 11-nt motif that contains a conserved U6 snRNA sequence (ACAGAGA-box) known to be important for pre-mRNA splicing. The ribozyme reaction is similar to the first step of splicing in that an internal 2'-hydroxyl of an unpaired adenosine attacks at the 5'-phosphate of a guanosine. It differs in that the leaving group is diphosphate rather than a 5' exon. The finding that lariat formation can be accomplished by a small RNA with sequences related to U6 snRNA indicates that the RNA available in the spliceosome may be involved in RNA-catalyzed branch formation.