A highly purified nucleolar associated endoribonuclease was tested for possible involvement in the processing of precursor ribosomal RNA at a primary cleavage site approximately 650 nucleotides downstream from the transcription initiation site. Preribosomal RNA sequences containing the +650 region were synthesized in vitro and subsequently digested over a range of concentrations of the nucleolar endoribonuclease. Cleavages generated by the nucleolar endoribonuclease were localized both by S1 nuclease protection analysis and primer extension analysis. A more precise determination of the specificity of cleavage was achieved by chemical cleavage DNA sequence analysis. These data demonstrated that the purified nucleolar endoribonuclease specifically cleaved the precursor ribosomal RNA transcript at the +650 site. Additional enzyme-dependent cleavages were observed upstream to the +650 site in a region which is rapidly degraded following processing at the +650 site in vivo. No major cleavages were observed for a distance of approximately 250 nucleotides downstream from the +650 site in a conserved region of sequence previously shown to be important in specifying processing at the +650 site. As a control, pancreatic ribonuclease, a single strand-specific endoribonuclease, was shown not to produce similar cleavages in the +650 region, indicating that cleavage by the nucleolar RNase was not simply due to accessibility of the RNA at the +650 site. Taken together, these results suggest that the nucleolar endoribonuclease may be necessary and sufficient to catalyze one of the initial endonucleolytic cleavages in preribosomal RNA processing.