Four different possible mechanisms of formaldehyde reacting with the endocyclic imino groups of nucleic acid bases leading to hydroxymethylated nucleic acid adducts were investigated. The potential energy surface for each mechanism was characterized using the technique of ab initio quantum chemistry. A water-assisted mechanism involving concerted interactions among the deprotonated nucleic acid base, formaldehyde, and a water molecule was found to be energetically most favorable. This mechanism also accounts for the experimentally observed features of these reactions, namely, that they are fast and reversible and both the forward and backward reactions are base catalyzed.