In previous studies of transcription and splicing of the ribosomal RNA precursor in isolated Tetrahymena nuclei, we found that the intervening sequence (IVS) was excised as a unique linear RNA molecule and was subsequently cyclized. In the present work, transcription at low monovalent cation concentration is found to inhibit splicing and to lead to the accumulation of a splicing intermediate. This intermediate contains splicing activity that either is tightly bound to the RNA or is part of the RNA molecule itself. The intermediate is able to complete the excision of the IVS when it is incubated with a monovalent cation (75 mM (NH&S04), a divalent cation (5-10 mM MgC12) and a guanosine compound(1 gM GTP, GDP, GMP or guanosine). ATP, UTP, CTP and guanosine compounds without 2’and 3’hydroxyl groups are inactive in causing excision of the IVS. Accurate excision of the IVS, cyclization of the IVS and (apparently) ligation of the 26s rRNA sequences bordering the IVS all take place under these conditions, suggesting that a single activity is responsible for all three reactions. During excision of the IVS, the 3’hydroxyl of the guanosine moiety becomes linked to the 5’end of the IVS RNA via a normal phosphodiester bond. When GTP is used to drive the reaction, it is added intact without hydrolysis. Based on these results, we propose that Tetrahymena pre-rRNA splicing occurs by a phosphoester transferase mechanism. According to this model, the guanosine cofactor provides the free 3’hydroxyl necessary to initiate a series of three transfers that results in splicing of the pre-rRNA and cyclization of the excised IVS.