Peach latent mosaic viroid (PLMVd), the causal agent of peach latent mosaic disease, has been sequenced and found to be a circular RNA molecule of 337 nucleotide residues, which adopts a branched conformation when it is folded in the model of lowest free energy. PLMVd exhibits limited homologies with other viroids and some satellite RNAs, but it does not have any of the central conserved sequences characteristic of the subgroups of typical viroids. However, a segment of approximately one-third of the PLMVd sequence has the elements required to form in the RNAs of both polarities the hammerhead structures proposed to act in the in vitro self-cleavage of avocado sunblotch viroid (ASBVd) and some satellite RNAs. Plus and minus partial- and full-length RNA transcripts of PLMVd containing the hammerhead structures displayed self-cleavage during transcription and after purification as predicted by these structures. These data are consistent with the high stability of the PLMVd hammerhead structures, more similar to the corresponding structures of some satellite RNAs than to those of ASBVd, and indicate that the self-cleavage reactions of PLMVd are most probably mediated by single hammerhead structures. Our results support the inclusion of PLMVd in a viroid subgroup represented by ASBVd, whose members are characterized by their ability to self-cleave in vitro, and probably in vivo, through hammerhead structures. A consensus phylogenetic tree has been obtained suggesting that PLMVd, together with ASBVd, may represent an evolutionary link between viroids and viroid-like satellite RNAs.