The vaccinia virus gene for S-adenosyl-L-methionine:mRNA (nucleoside-O2'-)-methyltransferase, an enzyme required for the formation of the 5' cap structure of mRNA, was identified. Protein sequence analysis revealed that this cap-specific methyltransferase is derived from the same open reading frame as that previously shown to encode VP39, a Mr 39,000 dissociable subunit of poly(A) polymerase that stimulates the formation of long poly(A) tails. Consistent with this finding, methyltransferase activity was associated with the heterodimeric poly(A) polymerase, which is composed of VP55 and VP39 subunits, as well as with monomeric VP39 protein isolated from vaccinia virions. In addition, cap-specific nucleoside-O2'-methyltransferase activity is associated with recombinant VP39, which was purified to near homogeneity from mammalian cells. From these data, we concluded that the same protein functions as a methyltransferase and a poly(A) polymerase stimulatory factor to modify the 5' and 3' ends of mRNA, respectively.