Type I topoisomerases alter DNA topology by cleaving and rejoining one strand of duplex DNA through a covalent protein-DNA intermediate. Here we show that vaccinia topoisomerase, a eukaryotic type IB enzyme, catalyzes site-specific endoribonucleolytic cleavage of an RNA-containing strand. The RNase reaction occurs via transesterification at the scissile ribonucleotide to form a covalent RNA-3'-phosphoryl-enzyme intermediate, which is then attacked by the vicinal 2' OH of the ribose sugar to yield a free 2', 3' cyclic phosphate product. Introduction of a single ribonucleoside at the scissile phosphate of an otherwise all-DNA substrate suffices to convert the topoisomerase into an endonuclease. Human topoisomerase I also has endoribonuclease activity. These findings suggest potential roles for topoisomerases in RNA processing.