A novel type II restriction and modification (R-M) system, Sth368I, which confers resistance to phiST84, was found in Streptococcus thermophilus CNRZ368 but not in the very closely related strain A054. Partial sequencing of the integrative conjugative element ICESt1, carried by S. thermophilus CNRZ368 but not by A054, revealed a divergent cluster of two genes, sth368IR and sth368IM. The protein sequence encoded by sth368IR is related to the type II endonucleases R.LlaKR2I and R.Sau3AI, which recognize and cleave the sequence 5'-GATC-3'. The protein sequence encoded by sth368IM is very similar to numerous type II 5-methylcytosine methyltransferases, including M.LlaKR2I and M.Sau3AI. Cell extracts of CNRZ368 but not A054 were found to cleave at the GATC site. Furthermore, the C residue of the sequence 5'-GATC-3' was found to be methylated in CNRZ368 but not in A054. Cloning and integration of a copy of sth368IR and sth368IM in the A054 chromosome confers on this strain phenotypes similar to those of CNRZ368, i.e., phage resistance, endonuclease activity of cell extracts, and methylation of the sequence 5'-GATC-3'. Disruption of sth368IR removes resistance and restriction activity. We conclude that ICESt1 encodes an R-M system, Sth368I, which recognizes the sequence 5'-GATC-3' and is related to the Sau3AI and LlaKR2I restriction systems.