MnmE, a Guanine nucleotide-binding protein conserved between bacteria and man, is involved in the modification of tRNAs. Here we provide biochemical and X-ray structural evidence for a new GTP-hydrolysis mechanism, where the G-domains of MnmE dimerise in a potassium-dependent manner and induce GTP hydrolysis. The structure in the presence of GDP-AlFx and potassium shows how juxtaposition of the subunits induces a conformational change around the nucleotide which reorients the catalytic machinery. A critical glutamate is positioned such as to stabilise or activate the attacking water. Potassium provides a positive charge into the catalytic site in a position analogous to the arginine finger in the Ras-RasGAP system. Mutational studies show that potassium-dependent dimerisation and GTP hydrolysis can be uncoupled and that interaction between the G-domains is a prerequisite for subsequent phosphoryl transfer. We propose a model for the juxtaposition of G-domains in the full-length protein and how it induces conformational changes in the putative tRNA-modification centre.