Nicotinamide adenine dinucleotide (NAD+) is a common cofactor in enzyme-catalyzed reactions that involve hydride transfers. In contrast, urocanase and urocanase-like enzymes use NAD+ for covalent electrophilic catalysis. Deciphering avenues by which this unusual catalytic strategy has diversified by evolution may point to approaches for the design of novel enzymes. In this report, we describe the S-methyl thiourocanate hydratase (S-Me-TUC) from Variovorax sp. RA8 as a novel member of this small family of NAD+-dependent hydratases. This enzyme catalyzes the 1,4-addition of water to S-methyl thiourocanate as the second step in the catabolism of S-methyl ergothioneine. The crystal structure of this enzyme in complex with the cofactor and a product analogue identifies critical sequence motifs that explain the narrow and nonoverlapping substrate scopes of S-methyl thiourocanate-, urocanate-, thiourocanate-, and Nτ-methyl urocanate-specific hydratases. The discovery of a S-methyl ergothioneine catabolic pathway also suggests that S-methylation or alkylation may be a significant activity in the biology of ergothioneine.