Ribonuclease P (RNase P) is a ubiquitous ribonucleoprotein complex responsible for the biosynthesis of tRNA. This enzyme from Escherichia coli contains a catalytic RNA subunit (M1 ribozyme) and a protein subunit (C5 cofactor). M1 ribozyme cleaves an RNA helix that resembles the acceptor stem and T-stem structure of its natural tRNA substrate. When covalently linked with a guide sequence, M1 RNA can be engineered into a sequence-specific endonuclease, M1GS ribozyme, which can cleave any target RNA sequences that base pair with the guide sequence. Recent studies indicate that M1GS ribozymes efficiently cleave the mRNAs of herpes simplex virus 1, human cytomegalovirus, and cancer causing BCR-ABL proteins in vitro and effectively inhibit the expression of these mRNAs in cultured cells. Moreover, RNase P ribozyme variants that are more active than the wild type M1 RNA can be generated using in vitro selection procedures and the selected variants are also more effective in inhibiting gene expression in cultured cells. These results demonstrate that engineered RNase P ribozymes represent a novel class of promising gene-targeting agents for applications in both basic research and clinical therapy. This review discusses the principle underlying M1GS-mediated gene inactivation and methodologies involved in effective M1GS construction, expression in vivo and emerging prospects of this technology for gene therapy.