We describe a type III restriction and modification (R/M) system,LlaFI, in Lactococcus lactis. LlaFI is encoded by a 12-kb native plasmid, pND801, harbored in L. lactisLL42-1. Sequencing revealed two adjacent open reading frames (ORFs). One ORF encodes a 680-amino-acid polypeptide, and this ORF is followed by a second ORF which encodes an 873-amino-acid polypeptide. The two ORFs appear to be organized in an operon. A homology search revealed that the two ORFs exhibited significant similarity to type III restriction (Res) and modification (Mod) subunits. The complete amino acid sequence of the Mod subunit of LlaFI was aligned with the amino acid sequences of four previously described type III methyltransferases. Both the N-terminal regions and the C-terminal regions of the Mod proteins are conserved, while the central regions are more variable. An S-adenosyl methionine (Ado-Met) binding motif (present in all adenine methyltransferases) was found in the N-terminal region of the Mod protein. The seven conserved helicase motifs found in the previously described type III R/M systems were found at the same relative positions in the LlaFI Res sequence.LlaFI has cofactor requirements for activity that are characteristic of the previously described type III enzymes. ATP and Mg2+ are required for endonucleolytic activity; however, the activity is not strictly dependent on the presence of Ado-Met but is stimulated by it. To our knowledge, this is the first type III R/M system that has been characterized not just in lactic acid bacteria but also in gram-positive bacteria.