The DNA specificity subunit (HsdS) of type I restriction-modification enzymes is composed of two independent target recognition domains and several regions whose amino acid sequence is conserved within an enzyme family. The conserved regions participate in intersubunit interactions with two modification subunits (HsdM) and two restriction subunits (HsdR) to form the complete endonuclease. It has been proposed that the domains of the HsdS subunit have a circular organisation providing the required symmetry for their interaction with the other subunits and with the bipartite DNA target. To test this model, we circularly permuted the HsdS subunit of the type IB R-M enzyme EcoAI at the DNA level by direct linkage of codons for original termini and introduction of new termini elsewhere along the N-terminal and central conserved regions. By analysing the activity of mutant enzymes, two circularly permuted variants of HsdS that had termini located at equivalent positions in the N-terminal and central repeats, respectively, were found to fold into a functional DNA recognition subunit with wild-type specificity, suggesting a close proximity of the N and C termini in the native protein. The wild-type HsdS subunit was purified to homogeneity and shown to form a stable trimeric complex with HsdM, M2S1, which was fully active as a DNA methyltransferase. Gel electrophoretic mobility shift assays revealed that the HsdS protein alone was not able to form a specific complex with a 30-mer oligoduplex containing a single EcoAI recognition site. However, addition of stoichiometric amounts of HsdM to HsdS led to efficient specific DNA binding. Our data provide evidence for the circular organisation of domains of the HsdS subunit. In addition, they suggest a possible role of HsdM subunits in the formation of this structure.