The 3'-5' riboexonuclease Rrp6p, a nuclear component of the exosome, functions with other exosome components to produce the mature 3' ends of 5.8S rRNA, sno- and snRNAs, and to destroy improperly processed precursor (pre)-rRNAs and pre-mRNAs. Rrp6p is a member of the RNase D family of riboexonucleases and displays a high degree of homology with the active site of the deoxyriboexonuclease domain of Escherichia coli DNA polymerase I, the crystal structure of which indicates a two-metal ion mechanism for phosphodiester bond hydrolysis. Mutation of each of the conserved residues predicted to coordinate metal ions in the active site of Rrp6p abolished activity of the enzyme in vitro and in vivo. Complete loss of Rrp6p activity caused by the Y361F and Y361A mutations supports the critical role proposed for the phenolic hydroxyl of Tyr361 in the reaction mechanism. Rrp6p also contains an helicase RNase D C-terminal (HRDC) domain of unknown function that is similar to domains in the Werner's and Bloom's Syndrome proteins. A point mutation in this domain results in Rrp6p that localizes to the nucleus, but fails to efficiently process the 3' ends of 5.8S pre-rRNA and some pre-snoRNAs. In contrast, this mutant retains the ability to degrade rRNA processing intermediates and 3'-extended, poly(A)+ snoRNAs. These findings indicate the potential for independent control of the processing and degradation functions of Rrp6p.