Cytosolic 5' nucleotidase II (cN-II) catalyses both the hydrolysis of a number of nucleoside monophosphates (e.g., IMP + H₂O--> inosine + Pi), and the phosphate transfer from a nucleoside monophosphate donor to the 5' position of a nucleoside acceptor (e.g., IMP + guanosine --> inosine + GMP). The enzyme protein functions through the formation of a covalent phosphoenzyme intermediate, followed by the phosphate transfer either to water (phosphatase activity) or to a nucleoside (phosphotransferase activity). It has been proposed that cN-II regulates the intracellular concentration of IMP and GMP and the production of uric acid. The enzyme might also have a potential therapeutic importance, since it can phosphorylate some anti-tumoral and antiviral nucleoside analogues that are not substrates of known kinases. In this review we summarise our recent studies on the structure, regulation and function of cN-II. Via a site-directed mutagenesis approach, we have identified the amino acids involved in the catalytic mechanism and proposed a structural model of the active site. A series of in vitro studies suggests that cN-II might contribute to the regulation of 5-phosphoribosyl-1-pyrophosphate (PRPP) level, through the so-called oxypurine cycle, and in the production of intracellular adenosine, formed by ATP degradation.