Hepatitis E virus (HEV), a positive-strand RNA virus, is an important causative agent of waterborne hepatitis. Expression of cDNA (encoding amino acids 1 to 979 of HEV nonstructural open reading frame 1) in insect cells resulted in synthesis of a 110-kDa protein (P110), a fraction of which was proteolytically processed to an 80-kDa protein. P110 was tightly bound to cytoplasmic membranes, from which it could be released by detergents. Immunopurified P110 catalyzed transfer of a methyl group from S-adenosylmethionine (AdoMet) to GTP and GDP to yield m 7 GTP or m 7 GDP. GMP, GpppG, and GpppA were poor substrates for the P110 methyltransferase. There was no evidence for further methylation of m 7 GTP when it was used as a substrate for the methyltransferase. P110 was also a guanylyltransferase, which formed a covalent complex, P110-m 7 GMP, in the presence of AdoMet and GTP, because radioactivity from both [␣-32 P]GTP and [ 3 H-methyl] AdoMet was found in the covalent guanylate complex. Since both methyltransferase and guanylyltransferase reactions are strictly virus specific, they should offer optimal targets for development of antiviral drugs. Cap analogs such as m 7 GTP, m 7 GDP, et 2 m 7 GMP, and m 2 et 7 GMP inhibited the methyltransferase reaction. HEV P110 capping enzyme has similar properties to the methyltransferase and guanylyltransferase of alphavirus nsP1, tobacco mosaic virus P126, brome mosaic virus replicase protein 1a, and bamboo mosaic virus (a potexvirus) nonstructural protein, indicating there is a common evolutionary origin of these distantly related plant and animal virus families.Hepatitis E virus (HEV) is an important etiological agent of acute epidemic and sporadic enteric hepatitis affecting millions of people mainly in developing countries. The first confirmed HEV epidemic, due to contamination of drinking water in New Delhi, India, was described in 1955. In addition to large epidemics in India and China, there are annually about 2 million sporadic cases of HEV infections in India alone. The mortality among HEV patients has been 0.5 to 4%, except in the case of pregnant women, for whom the average mortality is 20% (for reviews, see references 22 and 33). Recently, closely related viruses have been isolated from pigs, cows, sheep, goats, and rats, indicating zoonotic HEV infections (13).HEV is a nonenveloped virus with a diameter of 27 to 34 nm (9, 10), which does not replicate in cell cultures (1). The complete nucleotide sequence of the positive-strand RNA genome has been determined for several isolates from different parts of the world (40). (For references, see reference 8.) The HEV genome consists of a 27-nucleotide (nt)-long 5Ј noncoding region followed by an open reading frame (ORF) coding for a nonstructural protein of 1,693 aa residues. ORF2 starts 38 nt downstream of the termination codon of ORF1 and codes for the capsid protein of 660 aa. ORF3 between nt 5105 and 5476 overlaps with ORF2 and codes for a 123-aa-long polypeptide with unknown function. The 3Ј noncoding region is 65 n...