In Bacillus subtilis the ability to take up deoxyribonucleic acid (DNA) and undergo genetic transformation may coincide with the induction of defective phage(s) and the expression of possibly related cryptic genes. A restriction-modification enzyme system appears to be expressed. Targets of the restriction activity on the DNA can be blocked my methylation catalyzed by the methyl transferase. It is shown that cellular DNA becomes progressively methylated and reaches the maxium level during the peak of competency. Deoxycytidine residues of both incoming donor and resident DNA are methylated. The possible participation of these enzymes in recombination and the general role of cryptic genes in inducible functions are discussed.