Background: Understanding the RNA processing of an organism's transcriptome is an essential but challenging step in understanding its biology. Here we investigate with unprecedented detail the transcriptome of Pseudomonas aeruginosa PAO1, a medically important and innately multi-drug resistant bacterium. We systematically mapped RNA cleavage and dephosphorylation sites that result in 5'-monophosphate terminated RNA using a new high-throughput methodology called monophosphate RNA-Seq (pRNA-Seq). Transcriptional start sites (TSS) were also mapped using differential RNA-Seq (dRNA-Seq) and both datasets were compared to conventional RNA-Seq performed in a variety of growth conditions. Results: The pRNA-Seq transcript library revealed known tRNA, rRNA and tmRNA processing sites, together with previously uncharacterized RNA cleavage events that were found disproportionately near the 5' ends of transcripts associated with basic bacterial functions such as oxidative phosphorylation and purine metabolism. The majority (97%) of the processed mRNAs were cleaved at precise codon positions within defined sequence motifs indicative of distinct endonucleolytic activities. The most abundant of these motifs corresponded closely to an E. coli RNase E site previously established in vitro. Using the dRNA-Seq library, we performed an operon analysis and predicted 3,159 potential TSS. A correlation analysis uncovered 105 antiparallel pairs of TSS that were separated by 18 bp from each other and that were centered on a palindromic TAT(A/T)ATA motif, suggesting that such sites may provide a novel form of transcriptional regulation. TSS and RNA-Seq analysis allowed us to confirm expression of small non-coding RNAs (ncRNAs), many of which are differentially expressed in swarming and biofilm formation conditions. Conclusions: This study introduces pRNA-Seq methodology, which provides the first comprehensive, genome-wide survey of RNA processing in any organism. As a proof of concept, we have employed this technique to study the bacterium Pseudomonas aeruginosa and have discovered extensive transcript processing not previously appreciated. We have also gained novel insight into RNA maturation and turnover as well as a potential novel form of transcription regulation.