Here we characterize the modification-dependent restriction enzyme (MDE) EcoBLMcrX in vivo, in vitro and in its genomic environment. MDE cleavage of modified DNAs protects prokaryote populations from lethal infection by bacteriophage with highly modified DNA, and also stabilizes lineages by reducing gene import when sparse modification occurs in the wrong context. The function and distribution of MDE families are thus important. Here we describe the properties of EcoBLMcrX, an enzyme of the E. coli B lineage, in vivo and in vitro. Restriction in vivo and the genome location of its gene, ecoBLmcrX, were determined during construction and sequencing of a B/K-12 hybrid, ER2566. In classical restriction literature, this B system was named r6 or rglAB. Like many genome defense functions, ecoBLmcrX is found within a genomic island, where gene content is variable among natural E. coli isolates. In vitro, EcoBLMcrX was compared with two related enzymes, BceYI and NhoI. All three degrade fully cytosine-modified phage DNA, as expected for EcoBLMcrX from classical T4 genetic data. A new method of characterizing MDE specificity was developed to better understand action on fully-modified targets such as the phage that provide major evolutionary pressure for MDE maintenance. These enzymes also cleave plasmids with m5C in particular motifs, consistent with a role in lineage-stabilization. The recognition sites were characterized using a site-ranking approach that allows visualization of preferred cleavage sites when fully-modified substrates are digested. A technical constraint on the method is that ligation of one-nucleotide 5' extensions favors G:C over A:T approximately five-fold. Taking this bias into account, we conclude that EcoBLMcrX can cleave 3' to the modified base in the motif Rm5C|. This is compatible with, but less specific than, the site reported by others. Highly-modified site contexts, such as those found in base-substituted virulent phages, are strongly preferred.