The site-specific endonuclease reaction catalyzed by the ribozyme from the Tetrahymena pre-rRNA intervening sequence has been characterized with a substrate that forms a “matched” duplex with the 5′ exon binding site of the ribozyme [G2CCCUCUA5 + G ⇋ G2CCCUCU + GA5 (G = guanosine); Herschlag, D., & Cech, T. R. (1990) Biochemistry (preceding paper in this issue)]. The rate-limiting step with saturating substrate is dissociation of the product G2CCCUCU. Here we show that the reaction of the substrate G2CCCGCUA5, which forms a “mismatched” duplex with the 5′ exon binding site at position −3 from the cleavage site, has a value of kcat that is ~102-fold greater than for the matched substrate (50 °C, 10 mM MgCl2, pH 7). This is explained by the faster dissociation of the mismatched product, G2CCCCCU, than the matched product. With subsaturating oligonucleotide substrate and saturating G, the binding of the oligonucleotide substrate and the chemical step are each partially rate-limiting. The rate constant for the chemical step of the endonuclease reaction and the rate constant for the site-specific hydrolysis reaction, in which solvent replaces G, are each within ~2-fold with the matched and mismatched substrates, despite the ~103-fold weaker binding of the mismatched substrate. This can be described as “uniform binding” of the base at position −3 in the ground state and transition state [Albery, W. J., & Knowles, J. R. (1976) Biochemistry 15, 5631-5640]. Thus, the matched substrate does not use its extra binding energy to preferentially stabilize the transition state. The products G2CCCGCU and G2CC/CUCU bind the ribozyme less strongly than the matched product, G2CCCUCU. Nevertheless, like the matched product, each binds ~ 104-fold (~6 kcal/mol) stronger than predicted for base pairing between oligonucleotides. This suggests that disruption of base pairing at position −3 or −5 does not interfere with the tertiary interactions of the ribozyme that are responsible for the enhanced binding stability. The value of KmG = 110 μM for the reaction with subsaturating mismatched substrate is less than the dissociation constant of Kd(E•G) ≅ 500 μM because of a change in rate-limiting step from chemistry at low G to (partially) binding of the oligonucleotide substrate at high G. Rate-limiting chemistry at low G allows enhanced discrimination against the mismatched substrate, without recourse to added denaturants, which have been used previously to enhance specificity. The strong binding of the 5′ exon along with the weak binding of G is proposed to ensure efficient exon ligation during self-splicing. © 1990, American Chemical Society. All rights reserved.