The pal 4 nuclease (termed I-Sce II) is encoded in the group I al 4 intron of the COX I gene of Saccharomyces cerevisiae. It introduces a specific double-strand break at the junction of the two exons A4-A5 and thus mediates the insertion of the intron into an intronless strain. To define the sequence recognized by pal 4 we introduced 35 single mutations in its target sequence and examined their cleavage properties either in vivo in E. coli (when different forms of the pal 4 proteins were artificially produced) or in vitro with mitochondrial extracts of a mutant yeast strain blocked in the splicing of the al 4 intron. We also detected the pal 4 DNA endonuclease activity in extracts of the wild type strain. The results suggest that 6 to 9 noncontiguous bases in the 17 base-pair region examined are necessary for pal 4 nuclease to bind and cleave its recognition site. We observed that the pal 4 nuclease specificity can be significantly different with the different forms of the protein thus explaining why only some forms are highly toxic in E. coli. This study shows that pal 4 recognition site is a complex phenomenon and this might have evolutionary implications on the transfer properties of the intron.