In Escherichia coli, rRNA operons are transcribed as 30S precursor molecules that must be extensively processed to generate mature 16S, 23S and 5S rRNA. While it is known that RNase III cleaves the primary transcript to separate the individual rRNAs, there is little information about the secondary processing reactions needed to form their mature 3' and 5' termini. We have now found that inactivation of the endoribonuclease RNase E slows down in vivo maturation of 16S RNA from the 17S RNase III cleavage product. Moreover, in the absence of CafA protein, a homolog of RNase E, formation of 16S RNA also slows down, but in this case a 16.3S intermediate accumulates. When both RNase E and CafA are inactivated, 5' maturation of 16S rRNA is completely blocked. In contrast, 3' maturation is essentially unaffected. The 5' unprocessed precursor that accumulates in the double mutant can be assembled into 30S and 70S ribosomes. Precursors also can be processed in vitro by RNase E and CafA. These data indicate that both RNase E and CafA protein are required for a two step, sequential maturation of the 5' end of 16S rRNA, and that CafA protein is a new ribonuclease. We propose that it be renamed RNase G.