By targeting mRNA transcripts, non-coding small RNAs (sRNAs) regulate the expression of genes governing a wide range of bacterial functions. In the social myxobacteriumMyxococcus xanthus, the sRNA Pxr serves as a gatekeeper of the regulatory pathway controlling the life-cycle transition from vegetative growth to multicellular fruiting body development. When nutrients are abundant, Pxr prevents the initiation of the developmental program, but Pxr-mediated inhibition is alleviated when cells starve. To identify genes essential for Pxr function, a developmentally defective strain in which Pxr-mediated blockage of development is constitutively active (strain “OC”) was transposon-mutagenized to identify suppressor mutations that inactivate or bypass Pxr inhibition and thereby restore development. One of the four loci in which a transposon insertion restored development isrnd, encoding the Ribonuclease D protein (RNase D). RNase D is an exonuclease important for tRNA maturation. Here, we show that disruption ofrndabolishes the accumulation of Pxr-S, the product of Pxr processing from a longer precursor form (Pxr-L) and the active inhibitor of development. Additionally, the decrease in Pxr-S caused byrnddisruption was associated with increased accumulation primarily of a longer novel Pxr-specific transcript (Pxr-XL) rather than of Pxr-L. The introduction of a plasmid expressingrndreverted cells back to OC-like phenotypes in development and Pxr accumulation, indicating that a lack of RNase D alone suppresses the developmental defect of OC. Moreover, an in vitro Pxr-processing assay demonstrated that RNase D processes Pxr-XL into Pxr-L; this implies that overall, Pxr sRNA maturation requires a sequential two-step processing. Collectively, our results indicate that a housekeeping ribonuclease plays a central role in a model form of microbial aggregative development. To our knowledge, this is the first evidence implicating RNase D in sRNA processing.