Discovery of a structurally conserved metal-dependent lithium-inhibited phosphomonoesterase protein family has identified several potential cellular targets of lithium as used to treat manic depression. Here we describe identification of a novel family member using a "computer cloning" strategy. Human and murine cDNA clones encoded proteins sharing 92% identity and were highly expressed in kidney. Native and recombinant protein harbored intrinsic magnesium-dependent bisphosphate nucleotidase activity (BPntase), which removed the 3'-phosphate from 3'-5' bisphosphate nucleosides and 3'-phosphoadenosine 5'-phosphosulfate with Km and Vmax values of 0.5 microM and 40 micromol/min/mg. Lithium uncompetitively inhibited activity with a Ki of 157 microM. Interestingly, BPntase was competitively inhibited by inositol 1,4-bisphosphate with a Ki of 15 microM. Expression of mammalian BPntase complemented defects in hal2/met22 mutant yeast. These data suggest that BPntase's physiologic role in nucleotide metabolism may be regulated by inositol signaling pathways. The presence of high levels of BPntase in the kidney are provocative in light of the roles of bisphosphorylated nucleotides in regulating salt tolerance, sulfur assimilation, detoxification, and lithium toxicity. We propose that inhibition of human BPntase may account for lithium-induced nephrotoxicity, which may be overcome by supplementation of current therapeutic regimes with inhibitors of nucleotide biosynthesis, such as methionine.