Long double-stranded RNAs (dsRNAs) may undergo covalent modification (hyper-editing) by adenosine deaminases that act on RNA (ADARs), whereby up to 50–60% of adenosine residues are converted to inosine. Previously, we have described a ribonuclease activity in various cell extracts that specifically targets dsRNAs hyper-edited by ADARs. Such a ribonuclease may play an important role in viral defense, or may alternatively be involved in down-regulation of other RNA duplexes. Cleavage of hyper-edited dsRNA occurs within sequences containing multiple IU pairs but not in duplexes that contain either isosteric GU pairs or Watson–Crick base pairs. Here, we describe experiments aimed at further characterizing cleavage of hyper-edited dsRNA. Using various inosine-containing dsRNAs we show that cleavage occurs preferentially at a site containing both IU and UI pairs, and that inclusion of even a single GU pair inhibits cleavage. We also show that cleavage occurs on both strands within a single dsRNA molecule and requires a 2′-OH group. Strikingly, we show that ADAR1, ADAR2 or dADAR all preferentially generate the preferred cleavage site when hyper-editing a long dsRNA.