Tgs1 is the enzyme responsible for converting 7-methylguanosine RNA caps to the 2,2,7-trimethylguanosine cap structures of small nuclear and small nucleolar RNAs. but is unreactive with GDP, GTP, GpppA, ATP, CTP, or UTP. We find that the conserved residues Asp-68, Glu-91, and Trp-143 are essential for Tgs2 methyltransferase activity in vitro. The m 2,7 GDP product formed by Tgs2 can be converted to m 2,2,7 GDP by S. pombe Tgs1 in the presence of excess AdoMet. However, Giardia Tgs2 itself is apparently unable to add a second methyl group at guanine-N2. This result implies that 2,2,7-trimethylguanosine caps in Giardia are either synthesized by Tgs1 alone or by the sequential action of Tgs2 and Tgs1. The specificity of Tgs2 raises the prospect that some Giardia mRNAs might contain dimethylguanosine caps.Many small noncoding eukaryotic RNAs contain a hypermodified 2,2,7-trimethylguanosine (TMG) 2 5Ј-cap structure (1, 2). TMG caps are also found on nematode mRNAs generated via trans-splicing (3). TMG cap formation in Saccharomyces cerevisiae depends on the Tgs1 protein (4). The presence of a putative AdoMet binding motif in the Tgs1 polypeptide, the mutation of which affects TMG formation in vivo (4, 5), suggested that Tgs1 might be directly involved in TMG formation. Biochemical studies of Schizosaccharomyces pombe Tgs1 showed that it is indeed a catalyst of TMG synthesis (6). Methylation of guanine-N2 by S. pombe Tgs1 in vitro is strictly dependent on the prior methylation of guanine-N7, indicating that TMG caps are formed by post-transcriptional methylation of standard m 7 G caps (6). Guanine-N2 methylation by S. pombe Tgs1 in vitro requires no RNA component and no protein cofactor (6). Although early models suggested that the TMG synthase reaction might require cis-acting RNA signals or the assembly of specific ribonucleoprotein structures (7-10), the recent work on S. pombe Tgs1 instates a more conservative model in which ribonucleoprotein components might simply target Tgs1 to a particular subset of cellular RNAs that already have an m 7 G cap. Given the ubiquity of TMG caps in eukaryotic species, it is surprising that an S. cerevisiae tgs1 deletion mutant is viable, even though the small nuclear RNAs and small nucleolar RNAs in the tgs1⌬ strain lack TMG caps (4). Genetic analysis indicates that Tgs1 is also nonessential for growth of S. pombe.3 In contrast, TMG synthesis is essential in Drosophila, where mutations in the putative Tgs1 active site cause lethality at the early pupal stage of development that correlates with depletion of TMG-containing RNAs (11).The protozoan parasite Giardia lamblia is posited to occupy a deeply branching position in eukaryotic phylogeny. Analysis of the Giardia genome is providing important insights to the early origins of RNA processing mechanisms that are regarded as uniquely eukaryotic (12). Although there had been some debate whether Giardia mRNAs even have a 5Ј-cap structure (13,14), recent studies show that Giardia does possess the enzymatic machinery for m 7 G cap synth...