We report the characterization and partial purification of potato mitochondrial RNase Z, an endonuclease that generates mature tRNA 3' ends. The enzyme consists of one (or more) protein(s) without RNA subunits. Products of the processing reaction are tRNA molecules with 3' terminal hydroxyl groups and 3' trailers with 5' terminal phosphates. The main processing sites are located immediately 3' to the discriminator and one nucleotide further downstream. This endonucleolytic processing at and close to the tRNA 3' end in potato mitochondria suggests a higher similarity to the eukaryotic than to the prokaryotic tRNA 3' processing pathway. Partial purification and separation of RNase Z from the 5' processing activity RNase P allowed us to determine biochemical characteristics of the enzyme. The activity is stable over broad pH and temperature ranges, with peak activity at pH 8 and 30 degrees C. Optimal concentrations for MgCl2 and KCl are 5 mM and 30 mM, respectively. The potato mitochondrial RNase Z accepts only tRNA precursors with mature 5' ends. The precursor for tRNAPhe requires RNA editing for efficient processing by RNase Z.