The nuclear gene NUC1 encodes the major mitochondrial (mt) ribonuclease in the yeast Saccharomyces cerevisiae. We describe an in vitro mt transcription assay system based on lysates of purified mitochondria from a petite (rho-, mt deletion mutant) yeast strain in which NUC1 has been insertionally inactivated. Control in vitro run-on transcription assays using intact mitochondria demonstrate that the rate of incorporation of labeled precursor into mt RNA is identical in organelles from the nuc1 rho- mutant and its otherwise isochromosomal NUC1 parent strain. Brij-35 lysates of mitochondria from the nuc1 strain incorporate precursor into mt RNA at nearly the same rate as do intact organelles from that strain, while similar mt lysates from NUC1 cells show no such incorporation. Other control studies show that mt lysates from the nuc1 strain retain functional mt cAMP-dependent protein kinase and other critical activities. When the cloned template DNA encoding the yeast mt 21S rRNA gene, which is not retained in the nuc1 rho- strain, is added to mt lysates from that strain, transcripts are produced from the template under standard assay conditions.