The cyanobacterial circadian oscillator can be reconstituted in vitro; mixing three clock proteins (KaiA, KaiB, and KaiC) with ATP results in an oscillation of KaiC phosphorylation with a periodicity of ~24 h. The hexameric ATPase KaiC hydrolyzes ATP bound at subunit interfaces. KaiC also exhibits autokinase and autophosphatase activities, the latter of which is particularly noteworthy because KaiC is phylogenetically distinct from typical protein phosphatases. To examine this activity, we performed autodephosphorylation assays using (32)P-labeled KaiC. The residual radioactive ATP bound to subunit interfaces was removed using a newly established method, which included the dissociation of KaiC hexamers into monomers and the reconstitution of KaiC hexamers with nonradioactive ATP. This approach ensured that only the signals derived from (32)P-labeled KaiC were examined. We detected the transient formation of [(32)P]ATP preceding the accumulation of (32)P(i). Together with kinetic analyses, our data demonstrate that KaiC undergoes dephosphorylation via a mechanism that differs from those of conventional protein phosphatases. A phosphate group at a phosphorylation site is first transferred to KaiC-bound ADP to form ATP as an intermediate, which can be regarded as a reversal of the autophosphorylation reaction. Subsequently, the ATP molecule is hydrolyzed to form P(i). We propose that the ATPase active site mediates not only ATP hydrolysis but also the bidirectional transfer of the phosphate between phosphorylation sites and the KaiC-bound nucleotide. On the basis of these findings, we can now dissect the dynamics of the KaiC phosphorylation cycle relative to ATPase activity.