The exosome of the archaeon Sulfolobus solfataricus is a protein complex with phosphorolytic and polyadenylating activity. Little is known about its substrates and the regulation of its functions. We characterized the catalytically active hexameric ring composed of SsoRrp41 and SsoRrp42, and the nine-subunit exosomes containing in addition RNA binding protein SsoRrp4 or SsoCsl4 under various reaction conditions. The exosome synthesized heteropolymeric RNA tails and exhibited the highest in vitro activity at 60-70 degrees C. MgCl(2) was necessary for exosome activity. The two reactions, degradation and polyadenylation of RNA, were inhibited by increasing glycerol and KCl concentrations but were differently influenced by changes in pH and by increasing MgCl(2) concentrations. The three protein complexes with different compositions were similarly influenced by increasing concentrations of glycerol, KCl, and MgCl(2), but the SsoRrp4 exosome behaved differently with respect to pH changes. A 20-nucleotide poly(A) tail enabled the degradation and the polyadenylation of a 16S rRNA-derived transcript by the hexamer. Generally, RNA synthesis by the hexamer was more efficient than RNA phosphorolysis. Single-stranded poly(A) RNA, a heteropolymeric 97-nucleotide transcript, and natural tRNA were quickly polyadenylated, showing that these substrates were bound and their 3'-ends reached the active site. Despite this, their efficient degradation was possible only in the presence of SsoRrp4 or SsoCsl4. Thus, strong substrate binding by SsoRrp4- or SsoCsl4-containing exosomes is more important for phosphorolysis than for tailing of RNA. In summary, the data suggest that subunit composition and Mg(2+) are involved in the regulation of exosome activity.