We have examined the ability of wild-type polynucleotide phosphorylase (PNPase) from Streptomyces coelicolor and two mutant forms of the enzyme, N459D and C468A, to function in the polymerization of ADP and in the phosphorolysis of RNA substrates derived from the S. coelicolor rpsO-pnp operon. The wild-type enzyme was twice as active in polymerization as N459D and four times as active as C468A. The kcat/Km value for phosphorolysis of a structured RNA substrate by N459D was essentially the same as that observed for the wild-type enzyme, while C468A was 50% as active with this substrate. A mixture of all four common nucleoside diphosphates increased the kcat/Km for phosphorolysis of the structured substrate by the wild-type enzyme by a factor of 1.7 but did not affect phosphorolysis catalyzed by N459D or C468A. We conducted phosphorolysis of the structured substrate in the presence of nucleoside diphosphates and labeled the 3' ends of the products of those reactions using [(32)P]pCp. Digestion of the end-labeled RNAs and display of the products on a sequencing gel revealed that wild-type S. coelicolor PNPase was able to synthesize RNA 3' tails under phosphorolysis conditions while the N459D and C468A mutants could not. The wild-type enzyme did not add 3' tails to a substrate that already possessed an unstructured 3' tail. We propose a model in which the transient synthesis of 3' tails facilitates the phosphorolysis of structured substrates by Streptomyces PNPase.