AbstractMouse capping enzyme (Mce1) consists of two functional domains: the amino‐terminal triphosphatase domain and the carboxyl‐terminal guanylyltransferase (GTase) domain. The bifunctional Mce1 gene encodes 597 a.a. with a molecular weight ≈68 kDa. Mce1 cDNA is located on chromosome 4A4∼4A5 and is composed of 17 exons. To functionally characterize the C‐terminus of Mce1, we generated four truncated proteins with 12, 30, 37, or 60 a.a. deletions from the C‐terminus of either the wild type (Mce1) or the isolated GTase domain (211–597), respectively. Plasmid shuffling experiment with Saccharomyces cerevisiae GTase subunit gene CEG1 null mutant demonstrated that deletion mutants 211–567 and 211–585 were able to support cell viability in the presence of 5‐fluoroorotic acid, whereas 211–537 and 211–560 were not. Consistent with the yeast genetic study, both 211–567 and 211–585 had significant GTase activity in vitro, while 211–537 and 211–560 that were only detected in the insoluble fraction in the bacterial expression system, were completely inactive. Overall, both in vivo and in vitro studies indicate that the functional domain of Mce1 is between a.a. 211 and 567, and the heptapeptide sequence between 561 and 567 may play an important role in the enzyme activity. Copyright © 2005 John Wiley & Sons, Ltd.