Self-sustainable oscillation of KaiC phosphorylation has been reconstituted in vitro, demonstrating that this cycle is the basic time generator of the circadian clock of cyanobacteria. Here we show that the ATPase activity of KaiC satisfies the characteristics of the circadian oscillation, the period length, and the temperature compensation. KaiC possesses extremely weak but stable ATPase activity (15 molecules of ATP per day), and the addition of KaiA and KaiB makes the activity oscillate with a circadian period in vitro. The ATPase activity of KaiC is inherently temperature-invariant, suggesting that temperature compensation of the circadian period could be driven by this simple biochemical reaction. Moreover, the activities of wild-type KaiC and five period-mutant proteins are directly proportional to their in vivo circadian frequencies, indicating that the ATPase activity defines the circadian period. Thus, we propose that KaiC ATPase activity constitutes the most fundamental reaction underlying circadian periodicity in cyanobacteria.