Transglutaminase 3 (TGase 3) is a member of a family of Ca2+-dependent enzymes that catalyze covalent cross-linking reactions between proteins or peptides. TGase 3 isoform is widely expressed and is important for effective epithelial barrier formation in the assembly of the cell envelope. Among the nine TGase enzyme isoforms known in the human genome, only TGase 2 is known to bind and hydrolyze GTP to GDP; binding GTP inhibits its transamidation activity but allows it to function in signal transduction. Here we present biochemical and crystallographic evidence for the direct binding of GTP/GDP to the active TGase 3 enzyme, and we show that the TGase 3 enzyme undergoes a GTPase cycle. The crystal structures of active TGase 3 with guanosine 5'-O-(thiotriphosphate) (GTPgammaS) and GDP were determined to 2.1 and 1.9 A resolution, respectively. These studies reveal for the first time the reciprocal actions of Ca2+ and GTP with respect to TGase 3 activity. GTPgammaS binding is coordinated with the replacement of a bound Ca2+ with Mg2+ and conformational rearrangements that together close a central channel to the active site. Hydrolysis of GTP to GDP results in two stable conformations, resembling both the GTP state and the non-nucleotide bound state, the latter of which allows substrate access to the active site.