Streptozotocin, an antibiotic widely used for induction of diabetes in experimental animals and for the treatment of pancreatic neoplasms, was shown to be a potent methylating agent reacting with DNA in vitro to form methylated purines. The reaction was similar in extent and relative proportions of methylation products to that produced by N-methyl-N-nitrosourea, the aglycone of streptozotocin. When streptozotocin was administered to rats by i.v. injection, DNA was methylated with the formation of 7-methylguanine, O6-methylguanine, 3-methyladenine, and 7-methyladenine in liver, kidney, intestine, and pancreas. In contrast to N-methyl-N-nitrosourea which produced approximately equal amounts of methylation in DNA of liver, brain, and kidney, streptozotocin caused virtually no methylation in brain DNA; but, both liver and kidney DNA were alkylated to a greater extent than with N-methyl-N-nitrosourea. This methylation of renal DNA may account for the ability of streptozotocin to induce renal tumors. Streptozotocin produced significant methylation of pancreatic DNA which, if concentrated in the beta-cells, may account for their destruction. Pretreatment with nicotinamide reduced the extent of methylation of pancreatic DNA but did not affect the methylation in the liver or kidney. Methylation of beta-cell DNA in the pancreas may lead to the initiation of tumors if the extent of alkylation is not so great that cell death occurs.