Most bacteria produce the dUMP precursor for thymine nucleotide biosynthesis using two enzymes: a dCTP deaminase catalyzes the formation of dUTP and a dUTP diphosphatase catalyzes pyrophosphate release. Although these two hydrolytic enzymes appear to catalyze very different reactions, they are encoded by homologous genes. The hyperthermophilic archaeon Methanococcus jannaschii has two members of this gene family. One gene, at locus MJ1102, encodes a dUTP diphosphatase, which can scavenge deoxyuridine nucleotides that inhibit archaeal DNA polymerases. The second gene, at locus MJ0430, encodes a novel dCTP deaminase that releases dUMP, ammonia, and pyrophosphate. Therefore this enzyme can singly catalyze both steps in dUMP biosynthesis, precluding the formation of free, mutagenic dUTP. Besides differing from the previously characterized Salmonella typhimurium dCTP deaminase in its reaction products, this archaeal enzyme has a higher affinity for dCTP and its steady-state turnover is faster than the bacterial enzyme. Kinetic studies suggest: 1) the archaeal enzyme specifically recognizes dCTP; 2) dCTP deamination and dUTP diphosphatase activities occur independently at the same active site, and 3) both activities depend on Mg(2+). The bifunctional activity of this M. jannaschii enzyme illustrates the evolution of a suprafamily of related enzymes that catalyze mechanistically distinct reactions.