Nucleotide hydrolysis is essential for many aspects of cellular function. In the case of 3',5'-bisphosphorylated nucleotides, mammals possess two related 3'-nucleotidases, Golgi-resident 3'-phosphoadenosine 5'-phosphate (PAP) phosphatase (gPAPP) and Bisphosphate 3'-nucleotidase 1 (Bpnt1). gPAPP and Bpnt1 localize to distinct subcellular compartments and are members of a conserved family of metal-dependent lithium-sensitive enzymes. Although recent studies have demonstrated the importance of gPAPP for proper skeletal development in mice and humans, the role of Bpnt1 in mammals remains largely unknown. Here we report that mice deficient for Bpnt1 do not exhibit skeletal defects but instead develop severe liver pathologies, including hypoproteinemia, hepatocellular damage, and in severe cases, frank whole-body edema and death. Accompanying these phenotypes, we observed tissue-specific elevations of the substrate PAP, up to 50-fold in liver, repressed translation, and aberrant nucleolar architecture. Remarkably, the phenotypes of the Bpnt1 knockout are rescued by generating a double mutant mouse deficient for both PAP synthesis and hydrolysis, consistent with a mechanism in which PAP accumulation is toxic to tissue function independent of sulfation. Overall, our study defines a role for Bpnt1 in mammalian physiology and provides mechanistic insights into the importance of sulfur assimilation and cytoplasmic PAP hydrolysis to normal liver function.