DNMT2 is a human protein that displays strong sequence similarities to DNA (cytosine-5)-methyltransferases (m(5)C MTases) of both prokaryotes and eukaryotes. DNMT2 contains all 10 sequence motifs that are conserved among m(5)C MTases, including the consensus S:-adenosyl-L-methionine-binding motifs and the active site ProCys dipeptide. DNMT2 has close homologs in plants, insects and Schizosaccharomyces pombe, but no related sequence can be found in the genomes of Saccharomyces cerevisiae or Caenorhabditis elegans. The crystal structure of a deletion mutant of DNMT2 complexed with S-adenosyl-L-homocysteine (AdoHcy) has been determined at 1.8 A resolution. The structure of the large domain that contains the sequence motifs involved in catalysis is remarkably similar to that of M.HHAI, a confirmed bacterial m(5)C MTase, and the smaller target recognition domains of DNMT2 and M.HHAI are also closely related in overall structure. The small domain of DNMT2 contains three short helices that are not present in M.HHAI. DNMT2 binds AdoHcy in the same conformation as confirmed m(5)C MTases and, while DNMT2 shares all sequence and structural features with m(5)C MTases, it has failed to demonstrate detectable transmethylase activity. We show here that homologs of DNMT2, which are present in some organisms that are not known to methylate their genomes, contain a specific target-recognizing sequence motif including an invariant CysPheThr tripeptide. DNMT2 binds DNA to form a denaturant-resistant complex in vitro. While the biological function of DNMT2 is not yet known, the strong binding to DNA suggests that DNMT2 may mark specific sequences in the genome by binding to DNA through the specific target-recognizing motif.