Although the termination of transcription and 3' RNA processing of the eukaryotic mRNA has been linked to a polyadenylation signal and a transcript cleavage process, much less is known about the termination or processing of nonpolyadenylated RNA polymerase II transcripts. An efficiently expressed plasmid-based expression system was used to study the termination and processing of Schizosaccharomyces pombe U3 small nucleolar RNA (snoRNA) transcripts in vivo. The termination assay was linked to cell transformation, and restriction fragment length polymorphism was used to determine levels of plasmid-derived U3 snoRNA. Mutation analyses in vivo indicate that the maturation of the 3' end is not directly dependent on an external cis-acting sequence or structure; rather, it is dependent on a transcript cleavage that can occur hundreds or even thousands of nucleotides downstream of the mature U3 snoRNA sequence. Similarly, termination is dependent on the same transcript cleavage that is localized in a hairpin structure that normally follows the 3' end of the U3 snoRNA but that also can be moved hundreds or thousands of nucleotides downstream. Both processes, however, can be induced simultaneously and equally efficiently with a single unrelated Pac1 endonuclease-labile structure. The results support a "reversed torpedoes" model in which a single cleavage allows exonucleases and/or other protein factors access to the transcript leading to transcription termination in one direction and RNA maturation in the other direction.