The catalytic and folding properties of "DSL ribozyme" were investigated. This artificial ligase ribozyme was constructed by installing a catalytic unit to a designed self-folding RNA. The self-folding RNA was composed of three helices connected via two tertiary interactions that served as scaffolding in the molecular design. The present analysis revealed that the tertiary interaction between the GAAA loop and its specific receptor plays a crucial role in the folding of the active structure and the precise positioning of the catalytic site. On the basis of the analyses, the ribozyme was redesigned and converted to two advanced forms--a smaller derivative with appreciable catalytic activity and a derivative with RNA polymerase-like activity. The study demonstrates that redesign of an artificial ribozyme is effective and efficient if its structural elements are finely resolved. This kind of molecular transformation should serve as a prototypic model for understanding the molecular organization and evolution of naturally occurring ribozymes.