A ribozyme derived from the intervening sequence (IVS) of the Tetrahymena preribosomal RNA catalyzes a site-specific endonuclease reaction: G2CCCUCUA5 + G in equilibrium with G2CCCUCU + GA5 (G = guanosine). This reaction is analogous to the first step in self-splicing of the pre-rRNA, with the product G2CCCUCU analogous to the 5'-exon. The following mechanistic conclusions have been derived from pre-steady-state and steady-state kinetic measurements at 50 degrees C and neutral pH in the presence of 10 mM Mg2+. The value of kcat/Km = 9 x 10(7) M-1 min-1 for the oligonucleotide substrate with saturating G represents rate-limiting binding. This rate constant for binding is of the order expected for formation of a RNA.RNA duplex between oligonucleotides. (Phylogenetic and mutational analyses have shown that this substrate is recognized by base pairing to a complementary sequence within the IVS). The value of kcat = 0.1 min-1 represents rate-limiting dissociation of the 5'-exon analogue, G2CCCUCU. The product GA5 dissociates first from the ribozyme because of this slow off-rate for G2CCCUCU. The similar binding of the product, G2CCCUCU, and the substrate, G2CCCUCUA5, to the 5'-exon binding site of the ribozyme, with Kd = 1-2 nM, shows that the pA5 portion of the substrate makes no net contribution to binding. Both the substrate and product bind approximately 10(4)-fold (6 kcal/mol) stronger than expected from base pairing with the 5'-exon binding site. Thus, tertiary interactions are involved in binding. Binding of G2CCCUCU and binding of G are independent. These and other data suggest that binding of the oligonucleotide substrate, G2CCCUCUA5, and binding of G are essentially random and independent. The rate constant for reaction of the ternary complex is calculated to be kc approximately equal to 350 min-1, a rate constant that is not reflected in the steady-state rate parameters with saturating G. The simplest interpretation is adopted, in which kc represents the rate of the chemical step. A site-specific endonuclease reaction catalyzed by the Tetrahymena ribozyme in the absence of G was observed; the rate of the chemical step with solvent replacing guanosine, kc(-G) = 0.7 min-1, is approximately 500-fold slower than that with saturating guanosine. The value of kcat/Km = 6 x 10(7) M-1 min-1 for this hydrolysis reaction is only slightly smaller than that with saturating guanosine, because the binding of the oligonucleotide substrate is predominantly rate-limiting in both cases.(ABSTRACT TRUNCATED AT 400 WORDS)