Genomes of all free-living organisms encode the enzyme dUTPase (dUTP pyrophosphatase), which plays a key role in preventing uracil incorporation into DNA. In the present paper, we describe the biochemical and structural characterization of DUT1 (Saccharomyces cerevisiae dUTPase). The hydrolysis of dUTP by DUT1 was strictly dependent on a bivalent metal cation with significant activity observed in the presence of Mg2+, Co2+, Mn2+, Ni2+ or Zn2+. In addition, DUT1 showed a significant activity against another potentially mutagenic nucleotide: dITP. With both substrates, DUT1 demonstrated a sigmoidal saturation curve, suggesting a positive co-operativity between the subunits. The crystal structure of DUT1 was solved at 2 Å resolution (1 Å=0.1 nm) in an apo state and in complex with the non-hydrolysable substrate α,β-imido dUTP or dUMP product. Alanine-replacement mutagenesis of the active-site residues revealed seven residues important for activity including the conserved triad Asp87/Arg137/Asp85. The Y88A mutant protein was equally active against both dUTP and UTP, indicating that this conserved tyrosine residue is responsible for discrimination against ribonucleotides. The structure of DUT1 and site-directed mutagenesis support a role of the conserved Phe142 in the interaction with the uracil base. Our work provides further insight into the molecular mechanisms of substrate selectivity and catalysis of dUTPases.