DNA methyltransferase Dnmt1 ensures clonal transmission of lineage-specific DNA methylation patterns in a mammalian genome during replication. Dnmt1 is targeted to replication foci, interacts with PCNA, and favors methylating the hemimethylated form of CpG sites. To understand the underlying mechanism of its maintenance function, we purified recombinant forms of full-length Dnmt1, a truncated form of Dnmt1-(291-1620) lacking the binding sites for PCNA and DNA and examined their processivity using a series of long unmethylated and hemimethylated DNA substrates. Direct analysis of methylation patterns using bisulfite-sequencing and hairpin-PCR techniques demonstrated that full-length Dnmt1 methylates hemimethylated DNA with high processivity and a fidelity of over 95%, but unmethylated DNA with much less processivity. The truncated form of Dnmt1 showed identical properties to full-length Dnmt1 indicating that the N-terminal 290-amino acid residue region of Dnmt1 is not required for preferential activity toward hemimethylated sites or for processivity of the enzyme. Remarkably, our analyses also revealed that Dnmt1 methylates hemimethylated CpG sites on one strand of double-stranded DNA during a single processive run. Our findings suggest that these inherent enzymatic properties of Dnmt1 play an essential role in the faithful and efficient maintenance of methylation patterns in the mammalian genome.