Hammerhead ribozymes have been shown to specifically suppress the expression of target genes in various cells, but their in vivo cleavage products have seldom been directly detected. A hammerhead ribozyme sequence was designed to cleave the phosphodiester bond just 3' to the GUC of SalI site of M13mp18. The ribozyme was inserted some base pairs upstream of the target region without disrupting the reading frame of the lacZ' gene and without introducing any translational stop codons. More than 90% RNAs synthesized in vitro were cleaved at the expected site after 1-h incubation in the presence of 10 mM magnesium ion at 37 and 50 degrees C. Inclusion of the designed ribozyme. sequence was also shown to suppress the expression of the fused lacZ' gene in E. coli cells. When the cells were infected by the ribozyme-containing phage, they remained colourless in the presence of X-gal, and the cellular beta-galactosidase activity was reduced by more than 90%. Insertion of the same ribozyme sequence in reverse orientation showed little effect on beta-galactosidase activity. Furthermore, a primer extension by reverse transcriptase revealed a cleavage product that resulted from cleavage of LacZ' mRNA at the targeted site as designed. Thus, our data demonstrated that the designed hammerhead ribozyme cleaves and reduces the expression of a fused LacZ' mRNA in E. coli cells.