Estrogen administration to male Xenopus causes the cytoplasmic destabilization of the hepatic serum protein coding mRNAs, most notably, albumin, yet has little effect on mRNAs encoding intracellular proteins such as ferritin. This report describes an estrogen-inducible ribonuclease activity found in liver polysomes that degrades albumin mRNA 4 times faster in vitro than it degrades ferritin mRNA. This differential rate of degradation was observed upon incubation of polysome extract with free liver RNA, isolated liver mRNPs, or transcripts from plasmid vectors. A cleavage fragment consisting of a doublet of approximately 194 nucleotides in length was consistently observed upon digestion of transcripts for the full length or 5' half of albumin mRNA. The generation of this cleavage fragment was used as an assay to study properties of the polysome nuclease activity. The 194 doublet is produced by the action of a Mg(2+)-independent endonuclease. This distinguishes the Xenopus liver enzyme from the enzymes that degrade histone or c-myc mRNA in vitro. It is inactivated by 400 mM NaCl or heating at 90 degrees C, but not by placental ribonuclease inhibitor or N-ethylmaleimide. Finally, the polysomal nuclease activity does not degrade double-stranded RNA. We believe the estrogen-induced nuclease activity contains an enzyme(s) that may mediate hormone-regulated changes in mRNA stability in this tissue.