The RNA 5'-triphosphatase, nucleoside triphosphate phosphohydrolase, and guanylyltransferase activities of the vaccinia virus mRNA capping enzyme were previously localized to an NH2-terminal 60-kDa domain of the D1R subunit. Measurement of the relative ATPase and guanylyltransferase activities remaining in D1R carboxyl-terminal deletion variants expressed in Escherichia coli BL21(DE3)plysS localizes the carboxyl terminus of the active domain to between amino acids 520 and 545. Failure to obtain a deletion mutant with the loss of one activity indicates that the catalysis of both reactions requires a common domain structure. Based on these results, a truncated D1R protein terminating at amino acid 545 was expressed in E. coli and purified to homogeneity. D1R1-545 was found to be kinetically equivalent to the holoenzyme in regard to ATPase, RNA 5'-triphosphatase, and guanylyltransferase activities. Measurement of RNA binding by mobility shift and UV photo-cross-linking analyses also demonstrates the ability of this domain to bind RNA independent of the methyltransferase domain, comprised of the carboxyl terminus of D1R from amino acids 498-844 and the entire D12L subunit. RNA binding to D1R1-545 is substantially weaker than binding to either the methyltransferase domain or the holoenzyme. Binding is inhibited by 5'-OH RNA and to a lesser extent by DNA oligonucleotides in a concentration dependent manner which correlates with the inhibition of RNA 5'-triphosphatase activity by these same oligonucleotides. We conclude that D1R1-545 represents a functionally independent domain of the mRNA capping enzyme, fully competent in substrate binding and catalysis at both the triphosphatase and guanylyltransferase active sites.