Numerous attempts have been made to identify and engineer sequence-specific RNA endonucleases, as these would allow for efficient RNA manipulation. However, no natural RNA endonuclease that recognizes RNA in a sequence-specific manner has been described to date. Here, we report that SUPPRESSOR OF THYLAKOID FORMATION 1 (SOT1), an Arabidopsis pentatricopeptide repeat (PPR) protein with a small MutS-related (SMR) domain, has RNA endonuclease activity. We show that the SMR moiety of SOT1 performs the endonucleolytic maturation of 23S and 4.5S rRNA through the PPR domain, specifically recognizing a 13-nucleotide RNA sequence in the 5′ end of the chloroplast 23S–4.5S rRNA precursor. In addition, we successfully engineered the SOT1 protein with altered PPR motifs to recognize and cleave a predicted RNA substrate. Our findings point to SOT1 as an exciting tool for RNA manipulation.