In contrast to many type II restriction enzymes, dimeric proteins that cleave DNA at individual recognition sites 4-6 bp long, the SfiI endonuclease is a tetrameric protein that binds to two copies of an elongated sequence before cutting the DNA at both sites. The mode of action of the SfiI endonuclease thus seems more appropriate for DNA rearrangements than for restriction. To elucidate its biological function, strains of Escherichia coli expressing the SfiI restriction-modification system were transformed with plasmids carrying SfiI sites. The SfiI system often failed to restrict the survival of a plasmid with one SfiI site, but plasmids with two or more sites were restricted efficiently. Plasmids containing methylated SfI sites were not restricted. No rearrangements of the plasmids carrying SfiI sites were detected among the transformants. Hence, provided the target DNA contains at least two recognition sites, SfiI displays all of the hallmarks of a restriction-modification system as opposed to a recombination system in E. coli cells. The properties of the system in vivo match those of the enzyme in vitro. For both restriction in vivo and DNA cleavage in vitro, SfiI operates best with two recognition sites on the same DNA.