Escherichia coli ribonuclease III (RNase III; EC 3.1.24) is a double-stranded(ds)-RNA-specific endonuclease with key roles in diverse RNA maturation and decay pathways. E.coli RNase III is a member of a structurally distinct superfamily that includes Dicer, a central enzyme in the mechanism of RNA interference. E.coli RNase III requires a divalent metal ion for activity, with Mg2+ as the preferred species. However, neither the function(s) nor the number of metal ions involved in catalysis is known. To gain information on metal ion involvement in catalysis, the rate of cleavage of the model substrate R1.1 RNA was determined as a function of Mg2+ concentration. Single-turnover conditions were applied, wherein phosphodiester cleavage was the rate-limiting event. The measured Hill coefficient (nH) is 2.0 ± 0.1, indicative of the involvement of two Mg2+ ions in phosphodiester hydrolysis. It is also shown that 2-hydroxy-4H-isoquinoline-1,3-dione—an inhibitor of ribonucleases that employ two divalent metal ions in their catalytic sites—inhibits E.coli RNase III cleavage of R1.1 RNA. The IC50 for the compound is 14 μM for the Mg2+-supported reaction, and 8 μM for the Mn2+-supported reaction. The compound exhibits noncompetitive inhibitory kinetics, indicating that it does not perturb substrate binding. Neither the O-methylated version of the compound nor the unsubstituted imide inhibit substrate cleavage, which is consistent with a specific interaction of the N-hydroxyimide with two closely positioned divalent metal ions. A preliminary model is presented for functional roles of two divalent metal ions in the RNase III catalytic mechanism.