Previous studies demonstrated that the mammalian mRNA capping enzyme is a bifunctional enzyme containing RNA 5'-triphosphatase and mRNA guanylyl-transferase activities in a single polypeptide. In yeast, both the above activities are separated into two different subunits, alpha and beta, the genes for which we have cloned recently. It is thus interesting to compare the structural and functional relationships between the mammalian and yeast capping enzymes. Here we isolated two human cDNAs encoding mRNA capping enzymes termed hCAP1a and hCAP1b which encode 597 and 541 amino acids, respectively. They are different only at the region coding for the C-terminal portion of the enzyme. Comparison of the deduced amino acid sequences with other cellular and viral capping enzymes showed that all the regions conserved among mRNA guanylyltransferases are observed in our clones except one conserved C-terminal region which was absent in the hCAP1b protein. The purified recombinant hCAP1a gene product, hCAP1a, exhibited both RNA 5'-triphosphatase and mRNA guanylyltransferase activities. Deletion mutant analysis of hCAP1a showed that the N-terminal 213 amino acid fragment containing a tyrosine specific protein phosphatase motif catalyzed the RNA 5'-triphosphatase activity and the C-terminal 369 amino acid fragment exhibited the mRNA guanylyltransferase activity. On the other hand, hCAP1b showed RNA 5'-triphosphatase activity, but neither enzyme-GMP covalent complex formation nor cap structure formation was detected.