A previously unreported endoRNase present in the spheroplast fraction of Escherichia coli degraded homoribopolymers and small RNA oligonucleotides but not polymer RNA. Like the periplasmic endoRNase, RNase I, the enzyme cleaved the phosphodiester bond between any nucleotides; however, RNase I degraded polymer RNA as fast as homopolymers or oligomers. Both enzymes migrated as 27-kDa polypeptides by sodium dodecyl sulfate-polyacrylamide gel electrophoresis and could not be separated by various chromatographic procedures. In rna insertion mutants, both enzymes were completely missing; the spheroplast enzyme is called RNase I*, since it must be a form of RNase I. The two forms could be distinguished by physical treatments. RNase I could be activated by Zn2+, while RNase I* was inactive in the presence of Zn2+. RNase I was inactivated very slowly at 100 degrees C over a wide pH range, while RNase I* was inactivated slowly by heat at pH 4.0 but much more rapidly as the pH was increased to 8.0. In the presence of a thiol-binding agent, the inactivation at the higher pH values was much slower. These results suggest that RNase I*, but not RNase I, has free sulfhydryl groups. RNase I* activity in the cell against a common substrate was estimated to be several times that of RNase I. All four 2',3'-phosphomonoribonucleotides were identified in the soluble pools of growing cells. Such degradative products must arise from RNase I* activity. The activity would be suited for the terminal step in mRNA degradation, the elimination of the final oligonucleotide fragments, without jeopardizing the cell RNA. An enzyme with very similar specificity was found in Saccharomyces cerevisiae, suggesting that the activity may be widespread in nature.