Transfer RNA (Gm18) methyltransferase (TrmH) catalyzes methyl transfer from S-adenosyl-l-methionine to a conserved G18 in tRNA. We investigated the recognition mechanism of Thermus thermophilus TrmH for its guanosine target. Thirteen yeast tRNA(Phe) mutant transcripts were prepared in which the modification site and/or other nucleotides in the D-loop were substituted by dG, inosine, or other nucleotides. We then conducted methyl transfer kinetic studies, gel shift assays, and inhibition experiments using these tRNA variants. Sites of methylation were confirmed with RNA sequencing or primer extension. Although the G18G19 sequence is not essential for methylation by TrmH, disruption of G18G19 severely reduces the efficiency of methyl transfer. There is strict recognition of guanosine by TrmH, in that methylation occurs at the adjacent G19 when the G18 is replaced by dG or adenosine. The fact that TrmH methylates guanosine in D-loops from 4 to 12 nucleotides in length suggests that selection of the position of guanosine within the D-loop is relatively flexible. Our studies also demonstrate that the oxygen 6 atom of the guanine base is a positive determinant for TrmH recognition. The recognition process of TrmH for substrate is inducible and product-inhibited, in that tRNAs containing Gm18 are excluded by TrmH. In contrast, substitution of G18 with dG18 results in the formation of a more stable TrmH-tRNA complex. To address the mechanism, we performed the stopped-flow pre-steady state kinetic analysis. The result clearly showed that the binding of TrmH to tRNA is composed of at least three steps, the first bi-molecular binding and the subsequent two uni-molecular induced-fit processes.