Summary: The Burrows-Wheeler Transform (BWT) is a word transformation introduced in 1994 for Data Compression. It has become a fundamental tool for designing self-indexing data structures, with important applications in several areas in science and engineering. The Alternating Burrows-Wheeler Transform (ABWT) is another transformation recently introduced in [I. M. Gessel et al., Eur. J. Comb. 33, No. 7, 1537–1546 (2012; Zbl 1244.05016)] and studied in the field of Combinatorics on Words. It is analogous to the BWT, except that it uses an alternating lexicographical order instead of the usual one. Building on results in [the authors, Lect. Notes Comput. Sci. 11088, 1–17 (2018; Zbl 1436.68102)], where we have shown that BWT and ABWT are part of a larger class of reversible transformations, here we provide a combinatorial and algorithmic study of the novel transform ABWT. We establish a deep analogy between BWT and ABWT by proving they are the only ones in the above mentioned class to be rank-invertible, a novel notion guaranteeing efficient invertibility. In addition, we show that the backward-search procedure can be efficiently generalized to the ABWT; this result implies that also the ABWT can be used as a basis for efficient compressed full text indices. Finally, we prove that the ABWT can be efficiently computed by using a combination of the Difference Cover suffix sorting algorithm [J. Kärkkäinen et al., J. ACM 53, No. 6, 918–936 (2006; Zbl 1326.68111)] with a linear time algorithm for finding the minimal cyclic rotation of a word with respect to the alternating lexicographical order.