Rat liver nuclei were isolated and sonicated for extraction in order to study the capping of RNA. The guanosine 7-methyltransferase was purified from the extract by hydroxylapatite column chromatography with stepwise addition of phosphate buffer. It was assayed by using as methyl acceptor synthetic G(5')ppp(5')G and S-adenosylmethionine as donor. The enzyme appeared in a sharp peak at 160 mM. The same peak fraction was subsequently found to contain the enzyme that guanylylates short synthetic polynucleotides and low molecular weight yeast RNA as acceptors. The two enzymatic activities were separated on Sephadex G-150 chromatography, yielding guanylyltransferase and guanosine 7-methyltransferase with molecular weights of approximately 65,000 and 130,000 respectively. Guanylyltransferase was further purified by CM-Sephadex chromatography, whereby G-7-methyltransferase was completely removed. Dithiothreitol was essential for guanylylation, and 2 mM Mn2+ (optimum) was twice as active as 8 mM Mg2+ (optimum). The alpha-32P of [32P]GTP, but not its beta- or gamma-32P was incorporated into the cap structure. By using unlabeled GTP with [beta-32P]ppGpCpC-poly(A2,U2,G) as acceptor, [beta'-32P]-GpppG... was formed. Our purified transguanylylation enzyme was found to catalyze a [32P]pyrophosphate exchange with GTP, which may be useful as a rapid assay for transguanylylation.