The gene for the double-stranded RNA (dsRNA)-specific RNase III of Escherichia coli was expressed in Saccharomyces cerevisiae to examine the effects of this RNase activity on the yeast. Induction of the RNase III gene was found to cause abnormal cell morphology and cell death. Whereas double-stranded killer RNA is degraded by RNase III in vitro, killer RNA, rRNA, and some mRNAs were found to be stable in vivo after induction of RNase III. Variants selected for resistance to RNase III induction were isolated at a frequency of 4 X 10(-5) to 5 X 10(-5). Ten percent of these resistant strains had concomitantly lost the capacity to produce killer toxin and M dsRNA while retaining L dsRNA. The genetic alteration leading to RNase resistance was localized within the RNase III-coding region but not in the yeast chromosome. These results indicate that S. cerevisiae contains some essential RNA which is susceptible to E. coli RNase III.