Bacteriophage T4 codes for a DNA-[N6-adenine] methyltransferase (Dam) which recognizes primarily the sequence GATC in both cytosine- and hydroxymethylcytosine-containing DNA. Hypermethylating mutants, damh, exhibit a relaxation in sequence specificity, that is, they are readily able to methylate non-canonical sites. We have determined that the damh mutation produces a single amino acid change (Pro126 to Ser126) in a region of homology (III) shared by three DNA-adenine methyltransferases; viz, T4 Dam, Escherichia coli Dam, and the DpnII modification enzyme of Streptococcus pneumoniae. We also describe another mutant, damc, which methylates GATC in cytosine-containing DNA, but not in hydroxymethylcytosine-containing DNA. This mutation also alters a single amino acid (Phe127 to Val127). These results implicate homology region III as a domain involved in DNA sequence recognition. The effect of several different amino acids at residue 126 was examined by creating a polypeptide chain terminating codon at that position and comparing the methylation capability of partially purified enzymes produced in the presence of various suppressors. No enzyme activity is detected when phenylalanine, glutamic acid, or histidine is inserted at position 126. However, insertion of alanine, cysteine, or glycine at residue 126 produces enzymatic activity similar to Damh.