RNA capping by partially purified HeLa cell GTP:RNA guanylyltransferase has been shown to occur in the following sequence of two partial reactions involving a covalent protein-guanylate intermediate: (i) E(P68) + GTP in equilibrium E(P68-GMP) + PPi (ii) E(P68-GMP) + ppRNA in equilibrium GpppRNA + E(P68) Initially, the enzyme reacts with GTP in the absence of an RNA cap acceptor to form a covalent protein-guanylate complex. This complex consists of a GMP residue linked via a phosphoamide bond to a Mr = 68,000 protein. The enzyme then transfers the guanylate residue from the Mr = 68,000 polypeptide to the 5' end of diphosphate-terminated poly(a) to yield the capped derivative GpppA(pA)n. Both partial reactions have been shown to be reversible. In the reverse of Reaction i, E(P68--GMP) reacts with PPi to regenerate GTP. In the reverse of Reaction ii, the enzyme catalyzes the transfer of the 5'-GMP from capped RNA to the Mr = 68,000 protein to form protein-guanylate complex. A divalent cation is required for both partial reactions. The Mr = 68,000 protein is presumed to be a subunit of the HeLa guanylyltransferase. This interpretation is consistent with the sedimentation coefficient of 4.2 S of the native enzyme. Preliminary studies of RNA guanylyltransferase from mouse myeloma tumors suggest a similar mechanism of transguanylylation involving a Mr = 68,000 protein-guanylate complex. These data, in conjunction with previous studies of vaccinia virus guanylyltransferase (Shuman, S., and Hurwitz, J. (1981) Proc. Natl. Acad. Sci. U. S. A. 78, 187-191) suggests that covalent GMP-enzyme intermediates may be a general feature of the RNA capping reaction.