The structure of a 34 nucleotide RNA molecule in solution, which contains the conserved panhandle sequences, was determined by NMR spectroscopy and molecular modeling. The partially double-strandedpanhandle structure of the influenza virus RNA serves to regulate initiation and termination of viral transcription as well as polyadenylation. The panhandle RNA consists of internal loop flanked by short helices. The nucleotides at or near the internal loop are crucial for polymerase binding and transcriptional activity. They show more flexible conformational character than the Watson-Crick base-paired region, especially for the backbone torsion angles of alpha, gamma and delta. Although residues A10 and A12 are stacked in the helix, the phosphodiester backbones are distorted. Residues A12, A13 and G25 show dynamic sugar conformations and the backbone conformations of these nucleotides are flexible. This backbone conformation and its associated flexibility may be important for protein-RNA interactions as well as base-specific interactions.