The iridovirus frog virus 3 (FV3) can replicate in culture in fat head minnow (FHM) fish cells or in BHK-21 hamster cells. Viral DNA replication commences about 3 h after infection of FHM cells with FV3. Between 3 and 6 h postinfection (p.i.), a portion of the intranuclear FV3 DNA is partly unmethylated. At later times, p.i., all of the viral DNA in the nuclear and cytoplasmic compartments is methylated at the 5'-CCGG-3' sequences. Cytoplasmic FV3 DNA has not been found unmethylated. We have cloned viral DNA fragments from methylated virion DNA. By using the genomic sequencing technique, it has been demonstrated for segments of the FV3 DNA replicated both in FHM fish and BHK21 hamster cells that in a stretch encompassing a total of 350 bp, all of the analyzed 5'-CG-3' dinucleotides are methylated. The modified nucleotide 5-methyldeoxycytidine is present exclusively in the 5'-CG-3' dinucleotide combination. In the cloned FV3 DNA fragment p21A, an open reading frame has been located. The 5' region of this presumptive viral gene is also methylated in all 5'-CG-3' positions. DNA methyltransferase activity has been detected in the nuclei of FV3-infected FHM cells at 4, 11, and 20 h p.i. In the cytoplasmic fraction, comparable activity has not been observed. These data are consistent with the interpretation that FV3 DNA is newly synthesized and de novo methylated in the nuclei of infected FHM cells and subsequently exported into the cytoplasm for viral assembly.