The Pac1 ribonuclease of Schizosaccharomyces pombe is a member of the RNase III family of double-strand-specific ribonucleases. To examine RNA structural features required for efficient cleavage by the Pac1 RNase, we tested a variety of double-stranded and hairpin RNAs as substrates for the enzyme. The Pac1 RNase required substrates that have a minimal helix length of about 20 base pairs. The enzyme cut both strands of the helix at sites separated by two base pairs. However, Pac1 was also able to make a single-stranded cleavage within an internal bulge of an authentic Escherichia coli substrate at the same site chosen by RNase III. Pac1 efficiently degraded the structurally complex adenovirus VA RNA(I), but was inactive against the short HIV-1 TAR RNA hairpin. These results indicate that the Pac1 RNase prefers straight, perfect helices, but it can tolerate internal bulges that do not distort the helix severely. Like its homologue from Saccharomyces cerevisiae, the Pac1 RNase cleaved at two in vivo RNA processing sites in a hairpin structure in the 3' external transcribed spacer of the S. pombe pre-rRNA, suggesting a role for the enzyme in rRNA maturation.