Restriction enzyme Taq I was able to cleave four highly modified DNAs from bacteriophage T4, XP12, PBS1 and SP15. The relative ability of cohesive-ended TaqI fragments of these DNAs and of normal (lamda) DNA to be ligated by T4 DNA ligase was as follows: (lamda) DNA = XP12 DNA > T4 DNA = PBS1 DNA >> SP15 DNA. Extensive 5-methylation of cytosine residues as in XP12 DNA had no effect on ligation The interactions of DNA binding proteins with 5-methylcytosine (m('5)C)-rich DNA and with normal, cytosine (C)-rich DNA were studied by a nitrocellulose filter-binding assay. Little or no significant difference was seen in the binding of histone mixture. H1, H2b or H4 to m('5)C-rich DNA and normal DNA with a similar A+T content. High mobility group (HMG) proteins 14 and 17 showed a limited preference for normal C-containing DNA rather than m('5)C-rich DNA However, a mammalian protein which bound preferentially to m('5)C-rich DNA sequences has been identified. This methylated DNA-binding protein (MDBP) was extracted with 0.3 M NaCl from human placental nuclei and then partially purified by phosphocellulose, hydroxyapatite, DEAE-cellulose and Sephacryl S-200 chromatography. The effects of pH, the concentration of NaCl and divalent cations on the MDBP binding specificity have been determined. This protein strongly preferred to bind m('5)C-rich DNA only when the DNA was double-stranded and the extent of preferential binding of DNA by MDBP was correlated with its m('5)CpG doublet frequency. Also, DNA methylated by human DNA methyltransferase, which predominantly methylates CpG sites, bound better to MDBP than nick-translated DNA with similar m('5)C content but a random distribution of m('5)C residues. Therefore, MDBP appears to specifically recognize m('5)CpG containing sequences