The methylation status of Drosophila DNA has been discussed controversially over a long time. Recent evidence has provided strong support for the existence of 5-methylcytosine in DNA preparations from embryonic stages of fly development. The Drosophila genome contains a single candidate DNA methyltransferase gene that has been termed Dnmt2. This gene belongs to a widely conserved family of putative DNA methyltransferases. However, no catalytic activity has been demonstrated for any Dnmt2-like protein yet. We have now established a protocol for the immunological detection of methylated cytosine in fly embryos. Confocal analysis of immunostained embryos provided direct evidence for the methylation of embryonic DNA. In order to analyse the function of Dnmt2 in DNA methylation, we depleted the protein by RNA interference. Depletion of Dnmt2 had no detectable effect on embryonic development and resulted in a complete loss of DNA methylation. Consistently, overexpression of Dnmt2 from an inducible transgene resulted in significant genomic hypermethylation at CpT and CpA dinucleotides. These results demonstrate that Dnmt2 is both necessary and sufficient for DNA methylation in Drosophila and suggest a novel CpT/A-specific DNA methyltransferase activity for Dnmt2 proteins.