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Unlike other RNA polymerases, 2'-5' oligoadenylate synthetases, a family of interferon-induced enzymes, catalyze the formation of 2'-5', not 3'-5', phosphodiester bonds. Moreover, to be active, these proteins require double-stranded RNA as a cofactor. We have been identifying the specific residues of these proteins that impart their novel properties. Here, we report the identity of three such residues that underwent natural mutations in a transgenic mouse line. When deliberately introduced into recombinant proteins, each of these mutations rendered the protein enzymatically inactive. In an effort to understand the roles of these residues in enzyme activity, new mutants carrying other residues in one of these three sites were generated. Detailed characterization of the properties of the mutant proteins revealed that Lys 404 is needed for proper binding of the acceptor substrate, Pro 500 provides structural flexibility to the protein, and Ser 471 is probably required for its proper folding. This study illustrates the power of using natural mutations in transgenes as guides for studying structure-function relationships of proteins.