Rat liver nuclei were isolated and sonicated for extraction in order to study the capping of RNA. The guanosine 7-methyltransferase was purified from the extract by hydroxylapatite column chromatography with stepwise addition of phosphate buffer. It was assayed by using as methyl acceptor synthetic G(5'')ppp(5'')G and S-adenosylmethionine as donor. The enzyme appeared in a sharp peak at 160 mM. The same peak fraction contained the enzyme that guanylylates short synthetic polynucleotides and low MW yeast RNA as acceptors. The 2 enzymatic activities were separated on Sephadex G-150 chromatography, yielding guanylyltransferase and guanosine 7-methyltransferase with MW of approximately 65,000 and 130,000, respectively. Guanylyltransferase was further purified by CM-Sephadex chromatography, whereby G-7-methyltransferase was completely removed. Dithiothreitol was essential for guanylylation, and 2 mM Mn2+ (optimum) was twice as active as 8 mM Mg2+ (optimum). The .alpha.-32P of [32P]GTP, but not its .beta.- or .gamma.-32P, was incorporated into the cap structure. By using unlabeled GTP with [.beta.-32P]ppGpCpC-poly(A2,U2,G) as acceptor, [.beta.''-32P]- .**GRAPHIC**. was formed. The purified transguanylylation enzyme catalyzed a [32P]pyrophosphate exchange with GTP, which may be useful as a rapid assay for transguanylylation.