We have analyzed the relationship between the allosteric regulation and processive catalysis of DNA methyltransferase 1 (Dnmt1). Processivity is described quantitatively in terms of turnover rate, DNA dissociation rate, and processivity probability. Our results provide further evidence that the active site and the allosteric sites on Dnmt1 can bind DNA independently. Dnmt1's processive catalysis on unmethylated DNA is partially inhibited when the allosteric site binds unmethylated DNA and fully inhibited when the allosteric site binds a single-stranded oligonucleotide inhibitor. The partial inhibition by unmethylated DNA is caused by a decrease in the turnover rate and an increase in the substrate DNA dissociation rate. Processive catalysis with premethylated DNA is not affected if the allosteric site is exposed to premethylated DNA but is fully inhibited if the allosteric site binds unmethylated DNA or poly(dA-dT). In sum, the occupancy of the allosteric site modulates the enzyme's commitment to catalysis, which reflects the nature of the substrate and the DNA bound at the allosteric site. Our in vitro results are consistent with the possibility that the processive action of Dnmt1 may be regulated in vivo by specific regulatory nucleic acids such as DNA, RNA, or poly(ADP-ribose).