The last step of tRNA splicing in yeast is catalyzed by Tpt1 protein, which transfers the 2'-phosphate from ligated tRNA to NAD to produce ADP-ribose 1"-2"-cyclic phosphate (Appr>p). Structural and functional TPT1 homologs are found widely in eukaryotes and, surprisingly, also in Escherichia coli, which does not have this class of tRNA splicing. To understand the possible roles of the Tpt1 enzymes as well as the unusual use of NAD, the reaction mechanism of the E. coli homolog KptA was investigated. We show here that KptA protein removes the 2'-phosphate from RNA via an intermediate in which the phosphate is ADP-ribosylated followed by a presumed transesterification to release the RNA and generate Appr>p. The intermediate was characterized by analysis of its components and their linkages, using various labeled substrates and cofactors. Because the yeast and mouse Tpt1 proteins, like KptA protein, can catalyze the conversion of the KptA-generated intermediate to both product and the original substrate, these enzymes likely use the same reaction mechanism. Step 1 of this reaction is strikingly similar to the ADP-ribosylation of proteins catalyzed by a number of bacterial toxins.