Eukaryotic messenger RNA (mRNA) typically contains a methylated guanosine (m⁷G) cap, which mediates major steps of mRNA metabolism. Recently, some RNAs in both prokaryotic and eukaryotic organisms have been found to carry a non-canonical cap such as the NAD cap. Here we report that Arabidopsis DXO family protein AtDXO1, which was previously known to be a decapping enzyme for NAD-capped RNAs (NAD-RNA), is an essential component for m⁷G capping. AtDXO1 associates with and activates RNA guanosine-7 methyltransferase (AtRNMT1) to catalyze conversion of the guanosine cap to the m⁷G cap. AtRNMT1 is an essential gene. Partial loss-of-function mutations of AtRNMT1 and knockout mutation of AtDXO1 reduce m⁷G-capped mRNA but increase G-capped mRNAs, leading to similar pleiotropic phenotypes, whereas overexpression of AtRNMT1 partially restores the atdxo1 phenotypes. This work reveals an important mechanism in m⁷G capping in plants by which the NAD-RNA decapping enzyme AtDXO1 is required for efficient guanosine cap methylation.