Hepatitis delta virus (HDV) contains a single-stranded circular RNA genome of 1.7 kilobases. In this report we demonstrate that subfragments of HDV RNA can undergo autocatalytic cleavage. This cleavage requires at least 500 microM of Mg2+ or Ca2+, is not affected by varying the pH from 5.0 to 9.1, and occurs with RNA fragments as small as 133 nucleotides. The larger RNA fragments containing additional HDV sequences have a lower efficiency of cleavage. Deletion analysis at both ends of RNA subfragments suggested that the catalytic ability of HDV RNA resides in a stretch of no more than 117 nucleotides around the cleavage site. The cleavage occurs at the phosphodiester bond between nucleotides 688 and 689 on the HDV genomic map, generating a 5' fragment with a terminal uridyl 2',3'-cyclic monophosphate residue and a 3' fragment with a guanosyl residue with a 5'-hydroxyl group. The smallest autocleaving RNA does not contain the "hammerhead" sequence required for the autocleavage of other known self-cleaving RNA. The cleavage of HDV RNA occurs at a much faster rate, even at a very low Mg2+ concentration, than that of other "ribozymes." Thus, HDV RNA represents a distinct class of ribozyme.