The P7 element of group I introns contains a semiconserved "bulged" nucleotide, a C in group IA introns (nt 870 in the td intron) and an A in group IB introns [Cech, T.R. (1988) Gene 73, 259-271]. Variants U870, G870, and A870, isolated by a combination of in vitro and in vivo genetic strategies, indicate that C and A at position 870 are consistent with splicing whereas U and G are not. Although mutants G870 and U870 could be activated in vitro by increasing the Mg2+ concentration, their Km for GTP at pH 7 was 20-100-fold elevated, and they were unable to undergo site-specific hydrolysis. The dependence of the mutants on high guanosine concentrations could be substantially overcome by an increase in pH, suggesting that a tautomeric change, which makes U and G mimic C and A, is responsible for restoring function. In contrast to the striking Km effect, Vmax for the mutants differed by less than a factor of 2 from the wild type. Furthermore, streptomycin, an aminoglycoside antibiotic that competes with guanosine for its binding site, inhibited splicing of the U870 and G870 constructs at least as well as of the C870 and A870 variants, indicating that the guanosine-binding site of the mutants is proficient at interacting with a guanidino group. While our experiments argue against a hydrogen-bonding interaction between the C6-O of the cofactor and C4-NH2 of the bulged nucleotide, they are consistent with other models in which the C4-NH2 and/or N3 groups of the bulged C are involved in establishing an active ribozyme.