The enzymes involved in host-controlled modification and restriction by Bacillus subtilis strain N were detected in cell free extracts. In the presenct of Mg2+ the N-specific endonucleases cleaved unmodified DNA but did not attack phi-105C. N DNA carrying N-specific modification. The restriction endonuclease required neither SAM nor ATP for its activity. The N-specific modification enzyme was active only in the presence of SAM, indicating that modification in this syteem is a methylation of DNA.