B1 (Alu-equivalent) is a murine short interspersed element whose amplification probably involved an RNA intermediate. B1-homologous RNA comprise a population of heterogenous transcripts of questionable function. A cloned B1 is expressed in the injected frog oocyte by RNA polymerase III transcription, ribonucleoprotein formation, post-transcriptional 3'-processing, and nucleocytoplasmic transport. The present study characterizes small cytoplasmic B1 transcripts of mouse cells. Analyses of ten cDNA clones revealed a subset of a high degree of sequence identity (98%) from which a novel consensus was developed. Structural analyses of these RNAs demonstrated a conserved Alu domain originally identified as part of the 7SL RNA within the translational control domain of the signal recognition particle, while this structure was not conserved in the majority of B1s in the sequence database. Furthermore, it was demonstrated that 3'-processing occurred in only a subset of B1 transcripts in-vitro using homologous nuclear extracts, and in the injected oocyte. The data demonstrate that a limited set of B1 sequences are expressed as processed RNA polymerase III-transcripts of a high degree of structural conservation. Although this subset is transcriptionally active, the selective expression may be due to regulation at the levels of processing and cytoplasmic accumulation. Their lack of Poly-(A) or 3'-oligo-(U) tracts argue that these RNAs are unlikely to represent transposition intermediates. Rather, their cytosolic compartmentalization and conservation of a biologically recognized structure, suggests potential involvement in other aspects of cellular metabolism.