The biological nature of carnation small viroid-like RNA (CarSV RNA), a 275-nt circular molecule with self-cleaving hammerhead structures in its strands of both polarities, was investigated. The lack of infectivity observed in a series of transmission assays in carnation indicates that CarSV RNA, in spite of sharing structural similarities with viroid and viroid-like satellite RNAs from plants, does not belong to either of these two groups. Additional evidence in this direction comes from the observation that CarSV RNA also exists in carnation plants as DNA tandem repeats. In this respect, CarSV RNA is similar to a small transcript of a tandemly repeated DNA sequence of the newt genome. Moreover, CarSV and newt RNAs have similarities in their sequences as well as in some characteristics of their corresponding hammerhead structures. Further analyses have revealed that CarSV DNA is found directly fused to DNA sequences of carnation etched ring caulimovirus, a pararetrovirus, most likely in the form of an extrachromosomal element. The properties of the CarSV RNA/DNA system are those of a retroviroid-like element having some features in common with viroid and viroid-like satellite RNAs from plants and others with the newt transcript.