The 5' end of kinetoplastid mRNA possesses a hypermethylated cap 4 structure, which is derived from standard m7GpppN (cap 0) with additional methylations at seven sites within the first four nucleosides on the spliced leader RNA. In addition to TbCe1 guanylyltransferase and TbCmt1 (guanine N-7) methyltransferase, Trypanosoma brucei encodes a second cap 0 forming enzyme. TbCgm1 (T. brucei cap guanylyltransferase-methyltransferase) is a novel bifunctional capping enzyme consisting of an amino-terminal guanylyltransferase domain and a carboxyl-terminal methyltransferase domain. Recombinant TbCgm1 transfers the GMP to spliced leader RNA (SL RNA) via a covalent enzyme-GMP intermediate, and methylates the guanine N-7 position of the GpppN-terminated RNA to form cap 0 structure. The two domains can function autonomously in vitro. TbCGM1 is essential for parasite growth. Silencing of TbCGM1 by RNA interference increased the abundance of uncapped SL RNA and lead to accumulation of hypomethylated SL RNA. In contrast, silencing of TbCE1 and TbCMT1 did not affect parasite growth or SL RNA capping. We conclude that TbCgm1 specifically cap SL RNA, and cap 0 is a prerequisite for subsequent methylation events leading to the formation of mature SL RNA.