The existence of non-canonical nicotinamide adenine diphosphate (NAD) 5'-end capped RNAs is now well established. Nevertheless, the biological function of this nucleotide metabolite cap remains elusive. Here, we show that the yeast Saccharomyces cerevisiae cytoplasmic 5'-end exoribonuclease Xrn1 is also a NAD cap decapping (deNADding) enzyme that releases intact NAD and subsequently degrades the RNA. The significance of Xrn1 deNADding is evident in a deNADding deficient Xrn1 mutant that predominantly still retains its 5'-monophosphate exonuclease activity. This mutant reveals Xrn1 deNADding is necessary for normal growth on non-fermenting sugar and is involved in modulating mitochondrial NAD-capped RNA levels and may influence intramitochondrial NAD levels. Our findings uncover a contribution of mitochondrial NAD-capped RNAs in overall NAD regulation with the deNADding activity of Xrn1 fulfilling a central role.