The cytoplasm of mammalian cells of undoubtedly contain a number of different ribonuclease activities, few if any of which have been well characterized. We describe the purification of an exoribonuclease from rabbit reticulocytes which is able to degrade capped RNAs in a 5' to 3' manner. The purified enzyme contains polypeptides of 62 and 58 kDa and may contain an additional polypeptide of 54 kDa. It behaves as a complex of 150 kDa when analyzed by HPLC gel retardation on Superdex 200HR. It is heat-labile, dependent upon divalent cations (Mg2+) for activity, resistant to placental ribonuclease inhibitor, and active over a broad range (10-200 mM) of monovalent cation (K+) concentrations. The enzyme requires a polynucleotide chain of at least 10 bases for activity and cleaves oligonucleotides, up to an octamer long, from the 5' end of an appropriate substrate. In the case of a capped RNA substrate, product analysis by TLC and PAGE indicates that a capped trinucleotide or tetranucleotide or both is produced. Examination of the kinetics of the enzyme with capped and triphosphate-terminated substrates shows that that the cap structure inhibits the action of the enzyme. Furthermore, the data suggest that the rate-limiting step involves the positioning of the enzyme at the 5' end of the substrate and/or cleavage of the first internucleotide bond.