Detailed studies of the mechanism of action of the novel oligoribonuclease of Escherichia coli described in the previous paper (1) led to the following conclusions. 1. The enzyme prefers a free 3'-hydroxyl group for its action. 2. The enzyme attacks the oligoribonucleotide substrate in a sequential manner from the 3' end producing 5'-ribonucleotides. 3. The mode of attack appears to be processive; the enzyme acts by degrading one oligoribonucleotide chain to completion before proceeding to the hydrolysis of another chain. 4. The reaction rate is inversely proportional to the chain length of the substrate; however, the enzyme has a higher affinity for longer chains. 5. The enzyme activity is markedly inhibited by secondary structure; oligoribonucleotides combined with complementary polyribonucleotides are attacked poorly below the melting temperature of the complex and efficiently above the melting temperature. 6. The enzyme is inhibited by 5'-nucleotides of adenine and guanine; those of cytosine and uracil have a much smaller effect. The enzyme is not inhibited by 3'-nucleotides. 7. Studies with dinucleoside monophosphate show highest reaction rates with pyrimidine sequences in the order: CpCgreater than UpUgreater than CpUgreater than UpC. The presence of guanine at the 3' end is strongly inhibitory, and reaction rates are CpGgreater than UpG=ApGgreater than GpG.