Type II restriction and modification enzymes are an ideal model system for studying specific DNA-protein interaction because of their small size, simple catalytic requirements for activity, and sequence specificity. We chose to study the interaction of the Type II endonuclease and its corresponding methylase from Arthrobacter luteus ATCC 21606 with DNA. The specific methylase for the recognition site of Alu I endonuclease from Arthrobacter luteus was purified and its molecular and catalytic properties were studied. The isolated methylase has molecular weight of 56,000$\pm$1,000 as judged by 10\% polyacrylamide gel electrophoresis in the presence of 0.1\% sodium dodecyl sulfate. The methylase has shown to have the site-specific methylation activity on the Alu I recognition sequence, d(A-G-C-T). The enzyme obeyed Michaelis-Menten kinetics with respect to both DNA and S-adenosylmethioine. At $37\,^\circ\!C$, the Km for Alu I site of pBR322 DNA was 4.03 nM (Alu I sequence), that for S-adenosylmethionine was 0.44 $\mu$M, and the turnover numbers were 1.61 methyl transfers per minute per monomer for pBR322 DNA and 1.83 methyl transfers per minute per monomer for S-adenosylmethionine. In order to study specific sequence interactions between Alu I sequence and Hind III and Pvu II sequences, pBR322 DNA was methylated by the Alu I methylase. It was observed that the methylation of pBR322 DNA by the Alu I methylase in Alu I site within Hind III and Pvu II sites inhibited on subsequent restriction the activities of Hind III and Pvu II endonuclease. The other parameters for the methylase were also measured.