We recently demonstrated that the major decapping activity in mammalian cells involves DcpS, a scavenger pyrophosphatase that hydrolyzes the residual cap structure following 3' to 5' decay of an mRNA. The association of DcpS with 3' to 5' exonuclease exosome components suggests that these two activities are linked and there is a coupled exonucleolytic decay-dependent decapping pathway. We purified DcpS from mammalian cells and identified the cDNA encoding a novel 40 kDa protein possessing DcpS activity. Consistent with purified DcpS, the recombinant protein specifically hydrolyzed methylated cap analog but did not hydrolyze unmethylated cap analog nor did it function on intact capped RNA. Sequence alignments of DcpS from different organisms revealed the presence of a conserved hexapeptide, containing a histidine triad (HIT) sequence with three histidines separated by hydrophobic residues. Mutagenesis analysis revealed that the central histidine within the DcpS HIT motif is critical for decapping activity and defines the HIT motif as a new mRNA decapping domain, making DcpS the first member of the HIT family of proteins with a defined biological function.