Y RNAs (84-112 nt) are non-coding RNAs transcribed by RNA polymerase III and are characterized by a distinctive secondary structure. Human Y RNAs interact with the autoimmune proteins SSB and RO60 that together form a ribonucleoprotein (RNP) complex termed RoRNP and Y RNAs also perform regulatory roles in DNA and RNA replication and stability, which has major implications for diseases including cancer. During cellular stress and apoptosis, Y RNAs are cleaved into 3' and 5' end fragments termed Y RNA-derived small RNAs (ysRNAs). Although some ysRNA functions in stress, apoptosis and cancer have been reported, their fundamental biogenesis has not been described. Here we report that 3' end RNY5 cleavage is structure dependent. In high throughput mutagenesis experiments, cleavage occurred between the 2nd and 3rd nt above a double stranded stem comprising high GC content. We demonstrate that an internal loop above stem S3 is critical for producing 3' end ysRNAs (31 nt) with mutants resulting in longer or no ysRNAs. We show a UGGGU sequence motif at position 22 of RNY5 is critical for producing 5' end ysRNAs (22-25 nt). We show that intact RO60 is critical for ysRNA biogenesis. We conclude that ribonuclease L (RNASEL) contributes to Y RNA cleavage in mouse embryonic fibroblasts but is not the only endoribonuclease important in human cells.