Molecular mechanisms determining methylation patterns in eukaryotic genomes still remain unresolved. We have characterized, in Ascobolus, a gene for de novo methylation. This novel eukaryotic gene, masc1, encodes a protein that has all motifs of the catalytic domain of eukaryotic C5-DNA-methyltransferases but is unique in that it lacks a regulatory N-terminal domain. The disruption of masc1 has no effect on viability or methylation maintenance but prevents the de novo methylation of DNA repeats, which takes place after fertilization, through the methylation induced premeiotically (MIP) process. Crosses between parents harboring the masc1 disruption are arrested at an early stage of sexual reproduction, indicating that the activity of Masc1, the product of the gene, is crucial in this developmental process.