Methylation of cytosine is the common epigenetic modification in genomes ranging from bacteria to mammals, and aberrant methylation leads to human diseases including cancer. Recognition of a cognate DNA sequence by DNA methyltransferases and flipping of a target base into the enzyme active site pocket are the key steps in DNA methylation. Using molecular dynamics simulations and enhanced sampling techniques here we elucidate the role of conformational fluctuations of protein and active or passive involvement of protein elements that mediate base flipping and formation of the closed catalytic complex. The free energy profiles for the flipping of target cytosine into the enzyme active site support the major groove base eversion pathway; and the results show that the closed state of enzyme increases the free energy barrier, whereas the open state reduces it. We found that the interactions of the key loop residues of protein with cognate DNA altered the protein motions, and modulation of protein fluctuations relates to the closed catalytic complex formation. Methylation of cytosine in the active site of the closed complex destabilizes the interactions of catalytic loop residues with cognate DNA and reduces the stability of the closed state. Our study provides microscopic insights on the base flipping mechanism coupled with enzyme's loop motions and provides evidence for the role of conformational fluctuations of protein in the enzyme-catalyzed DNA processing mechanism.