Although the human genome is littered with sequences derived from the Hsmar1 
transposon, the only intact Hsmar1 transposase gene exists within a chimeric 
SET-transposase fusion protein referred to as Metnase or SETMAR. Metnase retains 
many of the transposase activities including terminal inverted repeat (TIR) 
specific DNA-binding activity, DNA cleavage activity, albeit uncoupled from 
TIR-specific binding, and the ability to form a synaptic complex. However, 
Metnase has evolved as a DNA repair protein that is specifically involved in 
nonhomologous end joining. Here, we present two crystal structures of the 
transposase catalytic domain of Metnase revealing a dimeric enzyme with unusual 
active site plasticity that may be involved in modulating metal binding. We show 
through characterization of a dimerization mutant, F460K, that the dimeric form 
of the enzyme is required for its DNA cleavage, DNA-binding, and nonhomologous 
end joining activities. Of significance is the conservation of F460 along with 
residues that we propose may be involved in the modulation of metal binding in 
both the predicted ancestral Hsmar1 transposase sequence as well as in the 
modern enzyme. The Metnase transposase has been remarkably conserved through 
evolution; however, there is a clustering of substitutions located in alpha 
helices 4 and 5 within the putative DNA-binding site, consistent with loss of 
transposition specific DNA cleavage activity and acquisition of DNA repair 
specific cleavage activity.