Anhydro-N-acetylmuramic acid kinase (AnmK) catalyzes the ATP-dependent conversion of the Gram-negative peptidoglycan (PG) recycling intermediate 1,6-anhydro-N-acetylmuramic acid (anhMurNAc) to N-acetylmuramic acid-6-phosphate (MurNAc-6-P). Here we present crystal structures of Pseudomonas aeruginosa AnmK in complex with its natural substrate, anhMurNAc, and a product of the reaction, ADP. AnmK is homodimeric, with each subunit comprised of two subdomains that are separated by a deep active site cleft, which bears similarity to the ATPase core of proteins belonging to the hexokinase-hsp70-actin superfamily of proteins. The conversion of anhMurNAc to MurNAc-6-P involves both cleavage of the 1,6-anhydro ring of anhMurNAc along with addition of a phosphoryl group to O6 of the sugar, and thus represents an unusual enzymatic mechanism involving the formal addition of H3PO4 to anhMurNAc. The structural complexes and NMR analysis of the reaction suggest that a water molecule, activated by Asp-182, attacks the anomeric carbon of anhMurNAc, aiding cleavage of the 1,6-anhydro bond and facilitating the capture of the gamma phosphate of ATP by O6 via an in-line phosphoryl transfer. AnmK is active only against anhMurNAc and not the metabolically related 1,6-anhydro-N-acetylmuramyl peptides, suggesting that the cytosolic N-acetyl-anhydromuramyl-L-alanine amidase AmpD must first remove the stem peptide from these PG muropeptide catabolites before anhMurNAc can be acted upon by AnmK. Our studies provide the foundation for a mechanistic model for the dual activities of AnmK as a hydrolase and a kinase of an unusual heterocyclic monosaccharide.