In yeast, inosine is found at the first position of the anticodon (position 34) of seven different isoacceptor tRNA species, while in Escherichia coli it is present only in tRNAArg. The corresponding tRNA genes all have adenosine at position 34. Using as substrates in vitro T7-runoff transcripts of 31 plasmids carrying each natural of synthetic tRNA gene harbouring an anticodon with adenosine 34, we have characterised a yeast enzyme that catalyses the conversion of adenosine 34 to inosine 34. The homologous E. coli enzyme modifies adenosine 34 only in tRNAs with an arginine anticodon ACG. The base conversion occurs by a hydrolytic deamination-type reaction. This was determined by reversed phase high-pressure liquid chromatography/electrospray mass spectrometry analysis of the reaction product after in vitro modification in [18O]water. This newly characterised tRNA:adenosine 34 deaminase was partially purified from yeast. It has a molecular mass of approximately 75 kDa, and it does not require any cofactor, except magnesium ions, to deaminate adenosine 34 efficiently in tRNA. The observed dependence of the enzymatic reaction on magnesium ions probably reflects the need for a correct tRNA architecture. Enzymatic recognition of tRNA does not depend on the presence of any "identify" nucleoside other than adenosine 34. Likewise, the presence of pseudouridine 32 or 1-methyl-guanosine 37 in the anticodon loop does not interfere with inosine 34 biosynthesis. However, the efficacy of adenosine 34 to inosine 34 conversion depends on the nucleotide sequence of the anticodon loop and its proximal stem, the best tRNA substrates being those with a purine at position 35. Mutations that affect the size of the anticodon loop or one of several three-dimensional base-pairs abolish the capacity of the tRNA to be substrate for the yeast tRNA:adenosine 34 deaminase. Evidently, the activity of yeast tRNA:adenosine 34 deaminase depends more on the global structural feature (conformational stability/flexibility) of the L-shaped tRNA substrates than on the identity of any particular nucleotide other than adenosine 34. An apparent K(m) of 2.3 nM for its natural substrate tRNASer (anticodon AGA) was measured. Altogether, these results suggest that a single enzyme can account for the presence of inosine 34 in all seven cytoplasmic A34-containing precursor tRNAs in yeast.