Group II introns are usually removed from precursor RNAs as lariats comprised of a circular component and a short 3' tail. We find that group II introns can also be excised as complete circles. Circle formation requires release of the 3' exon of a splicing substrate, apparently by a trans splicing mechanism. After 3' exon release, the terminal uridine of the intron attacks the 5' splice site, releasing the 5' exon and joining the first and last intron residues by a 2'-5' phosphodiester bond. RNA isolated from yeast mitochondria also contains circles, indicating that at least one group II intron (aI2) forms circles in vivo. Furthermore, analysis of RNA and DNA from certain mutant yeast strains shows that circular DNA introns exist and are produced by reverse transcription of RNA, rather than by ectopic homing.