RNA triphosphatase is an essential mRNA processing enzyme that catalyzes the first step in cap formation. The 2.05 A crystal structure of yeast RNA triphosphatase Cet1p reveals a novel active site fold whereby an eight-stranded beta barrel forms a topologically closed triphosphate tunnel. Interactions of a sulfate in the center of the tunnel with a divalent cation and basic amino acids projecting into the tunnel suggest a catalytic mechanism that is supported by mutational data. Discrete surface domains mediate Cet1p homodimerization and Cet1p binding to the guanylyltransferase component of the capping apparatus. The structure and mechanism of fungal RNA triphosphatases are completely different from those of mammalian mRNA capping enzymes. Hence, RNA triphosphatase presents an ideal target for structure-based antifungal drug discovery.