The hammerhead ribozyme is the smallest member of the naturally occurring family of RNA molecules that are capable of catalysing the site-specific cleavage of RNA. Functional-group modifications have led to an identification of groups that are important for catalysis, and have helped in the understanding of the role of Mg2+, which is required for catalysis. Recent studies on the three-dimensional structure of the hammerhead ribozyme, including X-ray analysis, have contributed significantly towards an understanding of its mode of action. In addition to contributing to our understanding of RNA catalysis, these studies have also stimulated investigations into the possibility of using ribozymes in gene therapy to cleave specific mRNAs.