The 2,2,7-trimethylguanosine (TMG) cap structure is characteristic of certain eukaryotic small nuclear and small nucleolar RNAs. Prior studies have suggested that cap trimethylation might be contingent on cis-acting elements in the RNA substrate, protein components of a ribonucleoprotein complex, or intracellular localization of the RNA substrate. However, the enzymatic requirements for TMG cap formation remain obscure because TMG synthesis has not been reconstituted in vitro from defined components. Tgs1 is a conserved eukaryal protein that was initially identified as being required for RNA cap trimethylation in vivo in budding yeast. Here we show that purified recombinant fission yeast Tgs1 catalyzes methyl transfer from S-adenosylmethionine (AdoMet) to m7GTP and m7GDP. Tgs1 also methylates the cap analog m(7)GpppA but is unreactive with GTP, GDP, GpppA, m2,2,7GTP, m2,2,7GDP, ATP, CTP, UTP, and ITP. The products of methyl transfer to m7GTP and m7GDP formed under conditions of excess methyl acceptor are 2,7-dimethyl GTP and 2,7-dimethyl GDP, respectively. Under conditions of limiting methyl acceptor, the initial m2,7GDP product is converted to m2,2,7GDP in the presence of excess AdoMet. We conclude that Tgs1 is guanine-specific, that N7 methylation must precede N2 methylation, that Tgs1 acts via a distributive mechanism, and that the chemical steps of TMG synthesis do not require input from RNA or protein cofactors.