We have previously reported the successful development of a targeted genetic method for the creation of temperature-sensitive vaccinia virus mutants [D. E. Hassett and R. C. Condit (1994) Proc. Natl. Acad. Sci. USA 91, 4554-4558]. This method has now been applied to the large subunit of the multifunctional vaccinia virus capping enzyme, encoded by gene D1R. Ten clustered charge-to-alanine mutations were created in a cloned copy of D1R. Four of these mutations were successfully transferred into the viral genome using transient dominant selection, and each of these four mutations yielded viruses with plaque phenotypes different from that of wild-type virus. Two of the mutant viruses, 516 and 793, were temperature sensitive in a plaque assay. Mutant 793 was also temperature sensitive in a one-step growth experiment. Phenotypic characterization of the 793 virus under both permissive and nonpermissive conditions revealed nearly normal patterns of viral protein and mRNA synthesis. Under nonpermissive conditions the 793 virus was defective in telomere resolution and blocked at an intermediate stage of viral morphogenesis. In vitro assays of various capping enzyme activities revealed that in permeabilized virions, enzyme guanylylate intermediate formation was reduced and methyltransferase activity was thermolabile, while in solubilized virion extracts enzyme guanylylate activity was reduced and both guanylyltransferase and methyltransferase activities were absent. Thus, the 793 mutation affects at least two separate enzymatic activities of the capping enzyme, guanylyltransferase and methyltransferase, and when incorporated into the virus genome, the mutation yields a virus that is temperature sensitive for growth, telomere resolution, and virion morphogenesis.