DiGIR1 is a group I-like cleavage ribozyme found as a structural domain within a nuclear twin-ribozyme group I intron. DiGIR1 catalyzes cleavage by branching at an Internal Processing Site (IPS) leading to formation of a lariat cap at the 5'-end of the 3'-cleavage product. The 3'-cleavage product is subsequently processed into an mRNA encoding a homing endonuclease. By analysis of combinations of 5'- and 3'-deletions, we identify a hairpin in the 5'-UTR of the mRNA (HEG P1) that is formed by conformational switching following cleavage. The formation of HEG P1 inhibits the reversal of the branching reaction, thus giving it directionality. Furthermore, the release of the mRNA is a consequence of branching rather than hydrolytic cleavage. A model is put forward that explains the release of the I-DirI mRNA with a lariat cap and a structured 5'-UTR as a direct consequence of the DiGIR1 branching reaction. The role of HEG P1 in GIR1 branching is reminiscent of that of hairpin P-1 in splicing of the Tetrahymena rRNA group I intron and illustrates a general principle in RNA-directed RNA processing.