The preference of murine DNA (cytosine-5)-methyltransferase (Dnmt1) for single stranded DNA substrates is increased up to 50-fold by the presence of a proximal 5-methyl cytosine (5(me)C). This modulation is distance-dependent and is due to an enhanced binding affinity and minor changes in catalytic efficiency. No modulation was observed with double stranded DNA. Modulation requires that the 5(me)C moiety be attached to the DNA strand containing the CpG methylation target. Our results support a model in which 5(me)C binding by the enzyme occurs to at least one site outside the region involved in CpG recognition. No modulation in response to 5(me)C is observed with the bacterial enzyme M.SssI, which lacks the large N-terminal regulatory domain found in Dnmt1. We suggest that this allosteric modulation involves the N-terminal domain of Dnmt1. (C) 2003 Elsevier Inc. All rights reserved.