In Acanthamoeba castellanii, most of the mtDNA-encoded tRNAs are edited by a process that replaces one or more of the first three nucleotides at their 5′ ends. As a result, base pairing potential is restored at acceptor stem positions (1:72, 2:71, and/or 3:70, in standard tRNA nomenclature) that are mismatched according to the corresponding tRNA gene sequence. Here we describe a novel nucleotide incorporation activity, partially purified from A. castellanii mitochondria, that has properties implicating it in mitochondrial tRNA editing in this organism. This activity is able to replace nucleotides at the first three positions of a tRNA (positions 1, 2, and 3), matching the newly incorporated residues through canonical base pairing to the respective partner nucleotide in the 3′ half of the acceptor stem. Labeling experiments with natural (Escherichia coli tRNATyr) and synthetic (run-off transcripts corresponding to A. castellanii mitochondrial tRNALeu1) substrates suggest that the nucleotide incorporation activity consists of at least two components, a 5′ exonuclease or endonuclease and a template-directed 3′-to-5′ nucleotidyltransferase. The nucleotidyltransferase component displays an ATP requirement and generates 5′ pppN... termini in vitro. The development of an accurate and efficient in vitro system opens the way for detailed studies of the biochemical properties of this novel activity and its relationship to mitochondrial tRNA editing in A. castellanii. In addition, the system will allow delineation of the structural features in a tRNA that identify it as a substrate for the labeling activity.