The main goal of this project is to develop an understanding of the biochemical properties of the hairpin domain of catalytic RNA to exploit for the rational design of hairpin ribozymes to cleave target RNAs in vitro and in vivo. Because small catalytic RNAs can bind and cleave an RNA target in a sequence-specific fashion, they have the potential to provide a powerful extension of the antisense method of gene inactivation. Understanding the biochemistry of the cleavage reaction will facilitate translating this potential into an effective technical and therapeutic tool. Critical issues for the design of specific and efficient ribozymes include: 1) defining the strength of the interaction between the substrate and the ribozyme that ensures selection of the correct target among competing, related sequences, 2) defining the affinity of the ribozyme for cleavage products that prevents slow rates of product release from limiting catalytic turnover, and 3) selecting accessible cleavage sites in structured, complex targets. Measuring the effects of ribozyme and substrate sequence variations on specific steps in the kinetic mechanism will reveal the optimum affinity between the ribozyme and substrate and product ligands. Libraries of hairpin variants with different sequence specificities will be used to locate accessible target sites in large, folded target RNAs. Assaying kinetics under a variety of temperature, PH and ionic conditions will begin to define the chemical mechanism for this new class of biological catalysts and also enhance the predictive value of in vitro optimization for cleavage of target RNAs in vivo. Hairpin ribozyme variants for these experiments will be directed against sequences in the yeast GAL4 gene so that guidelines developed through in vitro experiments can be tested directly in yeast. The GAL4 gene is an ideal model target because the dramatic effect of the GAL4 transcription activator protein on transcription from GAL-regulated promoters provides a sensitive, quantitative assay for ribozyme-mediated inactivation. Targeting optimization studies will be complemented by experiments to select and amplify functional hairpin variants in vitro. This methodology for "in vitro evolution" will provide information about the structure of the catalytic domain and may produce a hairpin variant that surpasses the naturally occurring sequence in catalytic efficiency. The hairpin catalytic RNA is the ribozyme of choice for these studies for two reasons. First, initial biochemical characterizations suggest that the hairpin domain may be better suited than the hammerhead domain for cleavage at the low divalent ion concentrations found in vivo. Second, the hairpin domain, unlike the hammerhead domain, readily catalyzes RNA ligation. Through ligation, a functional hairpin can acquire a selectable sequence to permit selection and amplification of optimal ribozyme sequence variants.