A shortened form of the Tetrahymena intervening sequence (IVS) RNA acts as an enzyme, catalyzing nucleotidyl transfer and hydrolysis reactions with oligo(cytidylic acid) substrates [Zaug, A. J., & Cech, T. R. (1986) Science (Washington, D.C.) 231, 470-475]. These reactions involve phosphodiester substrates. We now show that the same enzyme has activity toward phosphate monoesters. The 3'-phosphate of C5p or C6p is transferred to the 3'-terminal guanosine of the enzyme. The pH dependence of the reaction (optimum at pH 5) indicates that the enzyme has activity toward the dianion and much greater activity toward the monoanion form of the 3'-phosphate of the substrate. Phosphorylation of the enzyme is reversible by C5-OH and other oligo(pyrimidines) such as UCU-OH. Thus, the RNA enzyme acts as a phosphotransferase, transferring the 3'-terminal phosphate of C5p to UCU-OH with multiple turnover. At pH 4 and 5, the phosphoenzyme undergoes slow hydrolysis to yield inorganic phosphate. Thus, the enzyme has acid phosphatase activity. The RNA enzyme dephosphorylates oligonucleotide substrates with high sequence specificity, which distinguishes it from known protein enzymes.