The self-splicing ai5g group II intron was transformed into a three-part ribozyme that site-specifically cleaves small oligonucleotide substrates with multiple turnover. The ribozyme is composed of intron domain 1 (D1, 425 nucleotides), with catalytically essential domain 5 (D5, 58 nucleotides) provided separately as a reaction cofactor. Together, the D1/D5 complex cleaves small substrates analogous in sequence to the 5'-splice site of the intron. Activity of the ribozyme was studied using a combination of single- and multiple-turnover experiments in which the concentrations of the RNA components were varied in order to probe their individual role in the overall mechanism. Values for kcat, Km, and kcat/Km were the same within experimental error for the two enzymological approaches. These kinetic analyses reveal that the ribozyme utilizes a classic Michaelis-Menten reaction mechanism in which the chemical step of catalysis (kcat = kchem = approximately 0.03 min-1 at full saturation) is rate limiting for the overall reaction. The D1/D5 complex binds tightly to the substrate (Km = 6.3 nM) and specifically recognizes sequences both 5' and 3' to the ribozyme cleavage site. These studies represent the first quantitative analysis of group II recognition and affinity for the 5'-splice site. As observed in previous studies on the role of D5 RNA, D5 binds tightly to the ternary complex (Km = 870 nM). The second-order rate constant for RNA cleavage (kcat/Km = 3.3 x 10(6)) is an order of magnitude slower than that observed for other ribozymes in this mechanistic class, all of which are rate-limited by steps other than chemistry. That kcat equals kchem in this ribozyme is supported by the overall kinetic analysis and by the observation that an Rp phosphorothioate is cleaved approximately 3-fold more slowly than a phosphate at the cleavage site. These studies represent a preliminary examination of stereochemical preference by a group II intron active site in the transition state. The substrate specificity, reaction conditions, and mutational sensitivity of this ribozyme are consistent with a reaction analogous to the first step of group II intron self-splicing, although its stereochemical preference is analogous to a second-step reversal.