Modified nucleosides play an important role in RNA function and have been identified in multiple RNA types, including tRNAs, rRNAs, mRNAs and small regulatory RNAs. Among these, 5-methylcytosine (m(5)C) has been detected in rRNAs and tRNAs, and early reports suggested its presence in mRNAs. Known and well studied as an epigenetic mark in DNA, the prevalence and function of m(5)C in RNA is either incompletely explored (i.e., in tRNA and rRNA) or virtually unknown (i.e., in mRNA and other noncoding RNA). Two eukaryotic methyltransferases have been demonstrated to place m(5)C in RNA; however, their substrate specificity and cellular functions are not completely understood. With the recent development of m(5)C detection in RNA by bisulfite sequencing, comprehensive analyses to determine its occurrence and biological roles are now feasible. In this article we review the occurrence, function and biochemical detection of m(5)C in eukaryotic RNA, and provide perspectives on the biological roles of this modification in the transcriptome.