Methanococcus jannaschii MJ0936 is a hypothetical protein of unknown function with over 50 homologs found in many bacteria and Archaea. To help define the molecular (biochemical and biophysical) function of MJ0936, we determined its crystal structure at 2.4-A resolution and performed a series of biochemical screens for catalytic activity. The overall fold of this single domain protein consists of a four-layered structure formed by two beta-sheets flanked by alpha-helices on both sides. The crystal structure suggested its biochemical function to be a nuclease, phosphatase, or nucleotidase, with a requirement for some metal ions. Crystallization in the presence of Ni(2+) or Mn(2+) produced a protein containing a binuclear metal center in the putative active site formed by a cluster of conserved residues. Analysis of MJ0936 against a panel of general enzymatic assays revealed catalytic activity toward bis-p-nitrophenyl phosphate, an indicator substrate for phosphodiesterases and nucleases. Significant activity was also found with two other phosphodiesterase substrates, thymidine 5'-monophosphate p-nitrophenyl ester and p-nitrophenylphosphorylcholine, but no activity was found for cAMP or cGMP. Phosphodiesterase activity of MJ0936 had an absolute requirement for divalent metal ions with Ni(2+) and Mn(2+) being most effective. Thus, our structural and enzymatic studies have identified the biochemical function of MJ0936 as that of a novel phosphodiesterase.