We have characterized cloned His-tag human RNase H1. The activity of the enzyme exhibited a bell-shaped response to divalent cations and pH. The optimum conditions for catalysis consisted of 1 mM Mg 2؉ and pH 7-8. In the presence of Mg 2؉ , Mn 2؉ was inhibitory. Human RNase H1 shares many enzymatic properties with Escherichia coli RNase H1. The human enzyme cleaves RNA in a DNA-RNA duplex resulting in products with 5-phosphate and 3-hydroxy termini, can cleave overhanging single strand RNA adjacent to a DNA-RNA duplex, and is unable to cleave substrates in which either the RNA or DNA strand has 2 modifications at the cleavage site. Human RNase H1 binds selectively to "A-form"-type duplexes with approximately 10 -20-fold greater affinity than that observed for E. coli RNase H1. The human enzyme displays a greater initial rate of cleavage of a heteroduplex-containing RNA-phosphorothioate DNA than an RNA-DNA duplex. Unlike the E. coli enzyme, human RNase H1 displays a strong positional preference for cleavage, i.e. it cleaves between 8 and 12 nucleotides from the 5-RNA-3-DNA terminus of the duplex. Within the preferred cleavage site, the enzyme displays modest sequence preference with GU being a preferred dinucleotide. The enzyme is inhibited by single-strand phosphorothioate oligonucleotides and displays no evidence of processivity. The minimum RNA-DNA duplex length that supports cleavage is 6 base pairs, and the minimum RNA-DNA "gap size" that supports cleavage is 5 base pairs.