We have shown that the second intron of the Podospora mitochondrial gene coding for cytochrome b (Cytb 12) splices autocatalytically, using in vitro transcripts generated from the T7 promoter. The reaction takes place at 37 degrees C in the presence of 50 mM TRIS-HCl pH 7.5, 60 mM MgCl2 and 1 mM GTP but shows a low efficiency even at high KCl concentrations of up to 1.2 M. Under these conditions, intron bI2 follows the conventional pathway of group I splicing, and all characteristic products, with regard to both transesterification and hydrolysis, could be identified. Moreover, the intron is capable of undergoing cyclization, thereby releasing the noncoded G and one additional nucleotide (U) from the 5' end. The 5' cleavage site is preceded by the same two nucleotides, indicating a base-pairing at the same site of the internal guide sequence (IGS) for both splicing and cyclization ("one-binding-site model"). In addition, products resulting from site-specific hydrolysis 138 nucleotides downstream of the 5' splice site were detected. Unusually, the shortened intron is also able to form a circular RNA and an alternative sequence that aligns the cyclization site to the catalytic core of the intron must be assumed.