Pseudouridine (5-ribosyluracil, psi) was the first of a host of modified nucleoside constituents detected in cellular RNA and it remains the most abundant, being broadly distributed in the RNA of archaebacteria, eubacteria and eukaryotes. Like some other modifications, psi is particularly abundant in more complex organisms, reaching 2-3% of the total nucleoside constituents in tRNA, snRNA and rRNA of multicellular plants and animals. Like all other modified nucleosides, psi arises by site-specific, enzymically catalyzed modification of a nucleoside residue in an RNA molecule. Unlike all other modified nucleosides, psi arises by isomerisation (not substitution) of a classical nucleoside, uridine (1-ribosyluracil). There have been suggestions that key processes such as ribosome assembly and peptidyl transfer may rely, more than is generally appreciated, on RNA modifications such as O2'-methylation and pseudouridylation, respectively. However, a persuasive case for the view that secondary modifications are of primary importance in ribosome function has not been convincingly made. Accordingly, we think it is timely to broaden what is generally meant by the 'catalytic properties of rRNA', and to ask, to what extent do modifications contribute to in vivo rates of ribosome assembly and ribosomal peptide-bond synthesis? The first part of this article sets forth the evidence that there is a conspicuous association between modified nucleosides and cellular RNAs that participate in group-transfer reactions. The second part reviews evidence in support of the view that the functions of psi and other modified nucleosides are likely of central importance for understanding the dynamics and stereostructural modeling at functionally significant sites in the ribosome.