Thallium (Tl) is a highly toxic heavy metal situated between mercury and lead in the periodic table. While its neighbors have been thoroughly studied for DNA-based sensing, little is known about thallium detection. In this work, in vitro selection of RNA-cleaving DNAzymes is carried out using Tl(3+) as the target metal cofactor. Both normal DNA and phosphorothioate (PS)-modified DNA are tested for this purpose. While no Tl(3+)-dependent DNAzymes are obtained, a DNA oligonucleotide containing a single PS-modified RNA nucleotide is found to cleave by ∼7% by Tl(3+) at the RNA position. The remaining 93% are desulfurized. By hybridization of this PS-modified oligonucleotide with the Tm7 DNAzyme, the cleavage yield increases to ∼40% in the presence of Tl(3+) and Er(3+). Tm7 is an Er(3+)-dependent RNA-cleaving DNAzyme. It cleaves only the normal substrate but is completely inactive using the PS-modified substrate. Tl(3+) desulfurizes the PS substrate to the normal substrate to be cleaved by Tm7 and Er(3+). This system is engineered into a catalytic beacon for Tl(3+) with a detection limit of 1.5 nM, which is below its maximal contamination limit defined by the U.S. Environmental Protection Agency (10 nM).