DiGIR1 is a group I-like ribozyme derived from the mobile twin ribozyme group I intron DiSSU1 in the nuclear ribosomal DNA of the myxomycete Didymium iridis. This ribozyme is responsible for intron RNA processing in vitro and in vivo at two internal sites close to the 5'-end of the intron endo-nuclease open reading frame and is a unique example of a group I ribozyme with an evolved biological function. DiGIR1 is the smallest functional group I ribozyme known from nature and has an unusual core organization including the 6 bp P15 pseudoknot. Here we report results of functional and structural analyses that identify RNA elements critical for hydrolysis outside the DiGIR1 ribozyme core moiety. Results from deletion analysis, disruption/compensation mutagenesis and RNA structure probing analysis all support the existence of two new segments, named P2 and P2.1, involved in the hydrolysis of DiGIR1. Significant decreases in the hydrolysis rate, k (obs), were observed in disruption mutants involving both segments. These effects were restored by compensatory base pairing mutants. The possible role of P2 is to tether the ribozyme core, whereas P2.1 appears to be more directly involved in catalysis.