RNase J (RNJ) is a ribonuclease found in bacteria, archaea, and plant chloroplasts, and plays diverse roles in RNA maturation and stability. Chloroplast RNJ is encoded by the nuclear RNJ locus and is essential for embryo maturation. Arabidopsis or tobacco plants depleted for RNJ accumulate massive amounts of double-stranded RNA (dsRNA), which interferes with translation and causes chlorosis. Land plant RNJ uniquely contains a C-terminal GT1 domain, a DNA-binding motif found in transcription factors. Here, we have used complementation of an Arabidopsis rnj mutant with versions of RNJ with a mutated or deleted GT1 domain to investigate its role in RNJ function. We show that in vitro, the recombinant GT1 domain binds both dsRNA and DNA, but not single-stranded nucleic acids, with no sequence specificity. Furthermore, while RNJ lacking GT1 binding complements the rnj mutant, these plants accumulate high levels of dsRNA as detected by immunolocalization and RNA-Seq. GT1 mutations also change RNJ solubility in vivo, suggesting that the GT1 domain is involved in localization within the plastid. Taken together, our results suggest that the GT1 domain plays a key role in dsRNA removal through localizing the enzyme and/or selectively binding the dsRNA substrate.