Cytosolic 5'-nucleotidase/phosphotransferase (cN-II), specific for purine monophosphates and their deoxyderivatives, acts through the formation of a phosphoenzyme intermediate. Phosphate may either be released leading to 5'-mononucleotide hydrolysis or be transferred to an appropriate nucleoside acceptor, giving rise to a mononucleotide interconversion. Chemical reagents specifically modifying aspartate and glutamate residues inhibit the enzyme, and this inhibition is partially prevented by cN-II substrates and physiological inhibitors. Peptide mapping experiments with the phosphoenzyme previously treated with tritiated borohydride allowed isolation of a radiolabeled peptide. Sequence analysis demonstrated that radioactivity was associated with a hydroxymethyl derivative that resulted from reduction of the Asp-52-phosphate intermediate. Site-directed mutagenesis experiments confirmed the essential role of Asp-52 in the catalytic machinery of the enzyme and suggested also that Asp-54 assists in the formation of the acyl phosphate species. From sequence alignments we conclude that cytosolic 5'-nucleotidase, along with other nucleotidases, belong to a large superfamily of hydrolases with different substrate specificities and functional roles.