The pac1+ gene of the fission yeast Schizosaccharomyces pombe is essential for viability and its overexpression induces sterility and suppresses mutations in the pat1+ and snm1+ genes. The pac1+ gene encodes a protein that is structurally similar to RNase III from Escherichia coli, but its normal function is unknown. We report here the purification and characterization of the Pac1 protein after overexpression in E. coli. The purified protein is a highly active, double-strand-specific endoribonuclease that converts long double-stranded RNAs into short oligonucleotides and also cleaves a small hairpin RNA substrate. The Pac1 RNase is inhibited by a variety of double- and single-stranded polynucleotides, but polycytidylic acid greatly enhances activity and also promotes cleavage specificity. The Pac1 RNase produces 5'-phosphate termini and requires Mg2+; Mn2+ supports activity but causes a loss of cleavage specificity. Optimal activity was obtained at pH 8.5, at low ionic strength, in the presence of a reducing agent. The enzyme is relatively insensitive to N-ethylmaleimide but is strongly inhibited by ethidium bromide and vanadyl ribonucleoside complexes. The properties of the Pac1 RNase support the hypothesis that it is a eukaryotic homolog of RNase III.