We have developed an assay for an exoribonuclease present in HeLa cell nuclear extracts that degrades capped but not uncapped RNA substrates, and used it to partially purify and characterize such an activity. Capped and uncapped transcripts of different sizes (37-317 nt) were incubated with fractionated nuclear extracts, and in all cases the capped RNAs were stable while their uncapped counterparts were completely degraded. No changes in activity were detected when cap analogs were included in reaction mixtures, suggesting that the stability of capped RNAs was not due to a cap binding protein. The exoribonuclease was shown to be specific for RNA, and to function processively with either substrates containing 5'-hydroxyl or 5'-phosphorylated ends. The products were predominantly 5'-mononucleotides, and no detectable intermediates were observed at any reaction time points. Sedimentation analysis suggests that the native size of the nuclease is 7.4S or approximately 150 kDa. Interestingly, a nucleoside triphosphate was found to be necessary for specific and complete degradation of the uncapped RNAs. Finally, micrococcal nuclease (MN) pretreatment of the partially purified enzyme inhibited its activity. As several controls indicated that this was not due to non-specific effects of MN, this finding suggests that the exoribonuclease contains an essential RNA component.