An RNA-containing endonuclease that catalyzes the excision and maturation of the 16S ribosomal RNA (rRNA) from the rRNA primary transcript (pre-rRNA) in the hyperthermophilic archaeon Sulfolobus acidocaldarius has been characterized. The ribonucleoprotein was inactivated by micrococcal nuclease treatment and inactivation was reversed by reconstitution with bulk RNA. A 159-nucleotide RNA with sequence and structural similarity to U3 small nucleolar RNAs of eukaryotes copurified with the endonuclease activity. Oligonucleotide-targeted ribonuclease H inactivation of the U3-like RNA component also abolished processing activity. A motif within the U3 homolog is complementary to the region around the three cleavage sites in the pre-RNA substrate. Thus, U3-mediated processing of pre-rRNA is not specific to eukaryotes; its origin predates the divergence of archaea and eukaryotes.