The N-terminal 60 kDa (amino acids 1 to 545) of the D1 subunit of vaccinia virus mRNA capping enzyme is an autonomous bifunctional domain with triphosphatase and guanylyltransferase activities. We previously described two alanine cluster mutations, R77 to A (R77A)-K79A and E192A-E194A, which selectively inactivated the triphosphatase component. Here, we characterize the activities of 11 single alanine mutants-E37A, E39A, Q60A, E61A, T67A, T69A, K75A, R77A, K79A, E192A, and E194A-and a quadruple mutant in which four residues (R77, K79, E192, and E194) were replaced by alanine. We report that Glu-37, Glu-39, Arg-77, Glu-192, and Glu-194 are essential for ␥-phosphate cleavage. The five essential residues are conserved in the capping enzymes of Shope fibroma virus, molluscum contagiosum virus, and African swine fever virus. Probing the structure of D1(1-545) by limited V8 proteolysis suggested a bipartite subdomain structure. The essential residue Glu-192 is the principal site of V8 cleavage. Secondary cleavage by V8 occurs at the essential residue Glu-39. The triphosphatase-defective quadruple mutant transferred GMP to the triphosphate end of poly(A) to form a tetraphosphate cap structure, GppppA. We report that GppppA-capped RNA is a poor substrate for cap methylation by the vaccinia virus and Saccharomyces cerevisiae RNA (guanine-7) methyltransferases. The transcription termination factor activity of the D1-D12 capping enzyme heterodimer was not affected by mutations that abrogated ATPase activity. Thus, the capping enzyme is not responsible for the requirement for ATP hydrolysis during transcription termination.