To identify the function of hammerhead ribozymes in vivo, we have evaluated their catalytic activity and substrate specificity in S. cerevisiae. An assay system based on the use of X/lacZ fusion gene as a reporter was established. Subsequently either active or inactive ribozyme was fused in-frame to the amino terminus of the X/lacZ. The catalytic activity of ribozyme was analyzed using a quantitative β-galactosidase assay indirectly and was verified by the direct detection of the cleavage product using primer extension analysis. There were significant differences between an active Rz and an inactive Rz. By primer extension analysis, target X mRNA was cleaved with the catalytically active ribozyme whereas no detectable specific cleavage was observed with an inactive mutant. However, both an active and an inactive ribozyme resulted in a remarkable reduction in β-galactosidase activity. For elucidating the gene inactivation by an inactive ribozyme, the detailed experiment was performed with several Rz4 variants. Rz4 variants with alterations in the catalytic domain, stem I, or stem II-tetra loop moiety have been examined for their catalytic activity and gene suppression in vivo. An extent of the gene suppression was CUG (96.1%), G5A (92.1%), U7G (99.8%), Rz4f (75.7%), Rz4Δtetra (93%), Rz4As (90%), and Rz4Δsl (0%). A considerable decrease by 90% could be explained as an antisense effect. Nearly complete inhibition of gene expression among various constructs except Rz4f and Rz4Δsl might be due to an antisense effects mainly rather than a translational inefficiancy caused by a stable sten II-tetra loop structure. Moreover, it might be distinct that the slightly enhanced activity caused by Rz4f and the complete increase caused by Rz4Δsl implied the involvement of an active conformation for the gene suppression concomitant with the cleavage. It does matter whether the catalytic motif can be made or not, for the cleavage function. The folding into an active conformation for the cleavage function of Rz is a prerequisite, which consists of the catalytic core region, stem I, stem III, and stem II-tetra loop region in vivo. Such an active conformation gave rise to a remarkable reduction in β-galactosidase activity concomitant with the specific endonuclease cleavage. Based on direct evidence of cleavage fragments in vivo, it has been proven that Rzs strongly provided cleavage effects in addition to an antisense effect. Taken together from these results, we suggest that the suppression of gene expression by cis-acting hammerhead ribozyme is probably due to function as an antisense mechanism primarily and there is an irreversible effectiveness by the specific endonucleolytic cleavage if there is a catalytic motif of hammerhead ribozyme. It is a successful report showing an efficient and specific cleavage directly (non-PCR analysis) at the level of RNA and the gene suppression phenotypically at the level of protein with an unmodified ribozyme.