Pseudoknots play critical roles in packing the active structure of various 
functional RNAs. The importance of the P3-P7 pseudoknot in refolding of group I 
intron ribozymes has been recently appreciated, while little is known about the 
pseudoknot function in co-transcriptional folding. Here we used the Candida 
group I intron as a model to address the question. We show that 
co-transcriptional folding of the active self-splicing intron is twice as fast 
as refolding. The P3-P7 pseudoknot folds slowly during co-transcriptional 
folding at a rate constant similar to the folding of the active ribozyme, and 
folding of both P3-P7 and P1-P10 pseudoknots are inhibited by antisense 
oligonucleotides. We conclude that when RNA folding is coupled with 
transcription, formation of pseudoknot structures dominates the productive 
folding pathway and serves as a rate-limiting step in producing the 
self-splicing competent Candida intron.