Twin-ribozyme introns are formed by two ribozymes belonging to the group I family and occur in some ribosomal RNA transcripts. The group I-like ribozyme, GIR1, liberates the 5' end of a homing endonuclease messenger RNA in the slime mold Didymium iridis. We demonstrate that this cleavage occurs by a transesterification reaction with the joining of the first and the third nucleotide of the messenger by a 2',5'-phosphodiester linkage. Thus, a group I-like ribozyme catalyzes an RNA branching reaction similar to the first step of splicing in group II introns and spliceosomal introns. The resulting short lariat, by forming a protective 5' cap, might have been useful in a primitive RNA world.