A number of yeasts of the genus Candida translate the standard leucine-CUG codon as serine. This unique genetic code change is the only known alteration to the universal genetic code in cytoplasmic mRNAs, of either eukaryotes or prokaryotes, which involves reassignment of a sense codon. Translation of CUG as serine in these species is mediated by a novel serine-tRNA (ser-tRNACAG), which uniquely has a guanosine at position 33, 5' to the anticodon, a position that is almost invariably occupied by a pyrimidine (uridine in general) in all other tRNAs. We propose that G-33 has two important functions: lowering the decoding efficiency of the ser-tRNACAG and preventing binding of the leucyl-tRNA synthetase. This implicates this nucleotide as a key player in the evolutionary reassignment of the CUG codon. In addition, the novel ser-tRNACAG has 1-methylguanosine (m1G-37) at position 37, 3' to the anticodon, which is characteristic of leucine, but not serine tRNAs. Remarkably, m1G-37 causes leucylation of the ser-tRNACAG both in vitro and in vivo, making the CUG codon an ambiguous codon: the polysemous codon. This indicates that some Candida species tolerate ambiguous decoding and suggests either that (i) the genetic code change has not yet been fully established and is evolving at different rates in different Candida species; or (ii) CUG ambiguity is advantageous and represents the final stage of the reassignment. We propose that such dual specificity indicates that reassignment of the CUG codon evolved through a mechanism that required codon ambiguity and that ambiguous decoding evolved to generate genetic diversity and allow for rapid adaptation to environmental challenges.