The cloning and overexpression of the MspI DNA methyltransferase as a functional fusion with glutathione S-transferase is described. The fusion enzyme retains full biological activity and has been used to investigate the interaction of substrates and inhibitors with MspI DNA methyltransferase. The fusion enzyme has been purified to homogeneity in a single step on GSH-agarose and is free from contaminating exonuclease activity. The enzyme can be photolabelled with S-adenosyl-L-methionine and the level of incorporation of label is enhanced by the presence of a nonspecific DNA duplex. In the presence of a cognate oligodeoxynucleotide, no photolabelling was observed since methyl transfer occurs instead. The inclusion of a mechanism-based inhibitor of C-5 deoxycytidine DNA methylation (an oligodeoxynucleotide containing the base 2-pyrimidinone-1-beta-D-2'-deoxyribofuranoside in the position of the deoxycytidine to which methyl addition occurs), which is thought to form a covalent interaction with the reactive cysteine of such enzymes, led to an enhancement of S-adenosyl-L-methionine photolabelling which suggests that, in contrast with results obtained with EcoRII DNA methyltransferase [Som and Friedman (1991) J. Biol. Chem. 266, 2937-2945], methylcysteine is not the photolabelled product. The implications of the results obtained with this mechanism-based inhibitor are discussed with respect to other C-5-specific DNA methyltransferases. Gel-retardation assays in the presence of cognate oligodeoxynucleotides that contain the reactive pyrimidinone base in place of the deoxycytidine target base are described. These demonstrate that most probably a stable covalent bond is formed between the methyltransferase and this oligodeoxynucleotide. However, the alternative of extremely tight non-covalent binding cannot be rigorously excluded. Furthermore, the results from these experiments indicate that the reaction mechanism proceeds in a manner similar to that of HhaI DNA methyltransferase with sequence-specific DNA binding being followed by addition of S-adenosyl-L-methionine and concomitant isomerization of the ternary complex leading to methyl transfer. S-Adenosyl-L-homocysteine appears to inhibit the reaction pathway as a result of either competition with the methyl donor and potentiation of a high-affinity interaction between the enzyme and DNA in an abortive ternary complex or through an allosteric interaction.