The (cytosine-5) DNA methyltransferase M.HhaI causes its target cytosine base to be flipped completely out of the DNA helix upon binding. We have investigated the effects of replacing the target cytosine by other, mismatched bases, including adenine, guanine, thymine and uracil. We find that M.HhaI binds more tightly to such mismatched substrates and can even transfer a methyl group to uracil if a G:U mismatch is present. Other mismatched substrates in which the orphan guanine is changed exhibit similar behavior. Overall, the affinity of DNA binding correlates inversely with the stability of the target base pair, while the nature of the target base appears irrelevant for complex formation. The presence of a cofactor analog. S-adenosyl-L-homocysteine, greatly enhances the selectivity of the methyltransferase for cytosine at the target site. We propose that the DNA methyltransferases have evolved from mismatch binding proteins and that base flipping was, and still is, a key element in many DNA-enzyme interactions.