A class of small nucleolar RNAs (snoRNAs) is encoded in introns of protein-coding genes. The U16 snoRNA belongs to this class; it is encoded in the third intron of the Xenopus laevis (Xl) L1 ribosomal protein encoding gene and is released from the pre-mRNA by processing both in vivo and in vitro systems. In this paper, we show that in close proximity to the U16 snoRNA processing sites, sequences displaying self-cleaving activity are present. These elements are conserved in the two copies of the Xl L1 and in the single copy of the X. tropicalis L1. The catalytic activity corresponds to that already described for the minimal hairpin ribozyme [Dange et al., Science 242 (1990) 585-588]; it is Mn(2+)-dependent, produces 2'-3' cyclic phosphate and 5'-OH termini and comprises an essential GAAA element. Here we show that the 2'-OH group of the G residue is essential for catalysis.