In vivo and in vitro evidence is presented implicating a function of GATC methylation in the Escherichia coli replication origin, oriC, during initiation of DNA synthesis. Transformation frequencies of oriC plasmids into E. coli dam mutants, deficient in the GATC-specific DNA methylase, are greatly reduced compared with parental dam+ cells, particularly for plasmids that must use oriC for initiation. Mutations that suppress the mismatch repair deficiency of dam mutants do not increase these low transformation frequencies, implicating a new function for the Dam methylase. oriC DNA isolated from dam- cells functions 2- to 4-fold less well in the oriC-specific in vitro initiation system when compared with oriC DNA from dam+ cells. This decreased template activity is restored 2- to 3-fold if the DNA from dam- cells is first methylated with purified Dam methylase. Bacterial origin plasmids or M13-oriC chimeric phage DNA, isolated from either base substitution or insertion dam mutants of E. coli, exhibit some sensitivity to digestion by DpnI, a restriction endonuclease specific for methylated GATC sites, showing that these dam mutants retain some Dam methylation activity. Sites of preferred cleavage are found within the oriC region, as well as in the ColE1-type origin.