To study the mechanisms of RNA splicing we have analyzed the products generated by in vitro processing of a truncated 32P-labeled human beta-globin RNA precursor that contains the first two exons and the first intervening sequence (IVS1). Six major RNA products were detected and characterized. The first detectable RNA processing event is cleavage at the 5' GT of IVS1. Subsequently, accurately spliced RNA and the excised, intact IVS1 are simultaneously observed. The IVS1-containing RNA processing products have several unusual properties, which include: anomalous electrophoretic mobilities on polyacrylamide gels; a block to reverse transcription near the 3' end of IVS1; the presence of a nuclease-resistant component within IVS1. The block to reverse transcription and the nuclease-resistant component map to the same site near the 3' end of IVS1. The nuclease-resistant component appears to be a modified adenosine residue that contains an RNA branch. Based upon these and other structural studies we propose that the 5' end of IVS1 is joined by a 2'-5' phosphodiester linkage to the A residue in the RNAase T1 oligonucleotide ACTCTCTCTG located 28-37 nucleotides upstream from the IVS1 3' end. The IVS1 is therefore in the form of a lariat. These results imply that sequences within IVS1 actively participate in splicing.