In vitro compartmentalization (IVC) has previously been used to evolve protein enzymes. Here, we demonstrate how IVC can be applied to select RNA enzymes (ribozymes) for a property that has previously been unselectable: true intermolecular catalysis. Libraries containing 10(11) ribozyme genes are compartmentalized in the aqueous droplets of a water-in-oil emulsion, such that most droplets contain no more than one gene, and transcribed in situ. By coencapsulating the gene, RNA, and the substrates/products of the catalyzed reaction, ribozymes can be selected for all enzymatic properties: substrate recognition, product formation, rate acceleration, and turnover. Here we exploit the complementarity of IVC with systematic evolution of ligands by exponential enrichment (SELEX), which allows selection of larger libraries (>/=10(15)) and for very small rate accelerations (k(cat)/k(uncat)) but only selects for intramolecular single-turnover reactions. We selected approximately 10(14) random RNAs for Diels-Alderase activity with five rounds of SELEX, then six to nine rounds with IVC. All selected ribozymes catalyzed the Diels-Alder reaction in a truly bimolecular fashion and with multiple turnover. Nearly all ribozymes selected by using eleven rounds of SELEX alone contain a common catalytic motif. Selecting with SELEX then IVC gave ribozymes with significant sequence variations in this catalytic motif and ribozymes with completely novel motifs. Interestingly, the catalytic properties of all of the selected ribozymes were quite similar. The ribozymes are strongly product inhibited, consistent with the Diels-Alder transition state closely resembling the product. More efficient Diels-Alderases may need to catalyze a second reaction that transforms the product and prevents product inhibition.