Database searches of the Caenorhabditis elegans and human genomic DNA sequences revealed genes encoding ribonuclease H1 (RNase H1) and RNase H2 in each genome. The human genome contains a single copy of each gene, whereas C. elegans has four genes encoding RNase H1-related proteins and one gene for RNase H2. By analyzing the mRNAs produced from the C. elegans genes, examining the amino acid sequence of the predicted protein, and expressing the proteins in Esherichia coli we have identified two active RNase H1-like proteins. One is similar to other eukaryotic RNases H1, whereas the second RNase H (rnh-1.1) is unique. The rnh-1.0 gene is transcribed as a dicistronic message with three dsRNA-binding domains; the mature mRNA is transspliced with SL2 splice leader and contains only one dsRNA-binding domain. Formation of RNase H1 is further regulated by differential cis-splicing events. A single rnh-2 gene, encoding a protein similar to several other eukaryotic RNase H2L's, also has been examined. The diversity and enzymatic properties of RNase H homologues are other examples of expansion of protein families in C. elegans. The presence of two RNases H1 in C. elegans suggests that two enzymes are required in this rather simple organism to perform the functions that are accomplished by a single enzyme in more complex organisms. Phylogenetic analysis indicates that the active C. elegans RNases H1 are distantly related to one another and that the C. elegans RNase H1 is more closely related to the human RNase H1. The database searches also suggest that RNase H domains of LTR-retrotransposons in C. elegans are quite unrelated to cellular RNases H1, but numerous RNase H domains of human endogenous retroviruses are more closely related to cellular RNases H.