An enzyme was isolated from a eucaryotic, ChloreUla-like green alga infected with the virus PBCV-1 which exhibits type II restriction endonuclease activity. The enzyme recognized the sequence GATC and cleaved DNA 5' to the G. Methylation of deoxyadenosine in the GATC sequence inhibited enzyme activity. In vitro the enzyme cleaved host Chlorella nuclear DNA but not viral DNA because host DNA contains GATC and PBCV-1 DNA contains GmATC sequences. PBCV-1 DNA is probably methylated in vivo by the PBCV-1-induced methyltransferase described elsewhere (Y. Xia and J. L. Van Etten, Mol. Cell. Biol. 6:1440 1445). Restriction endonuclease activity was first detected 30 to 60 min after viral infection; the appearance of enzyme activity required de novo protein synthesis, and the enzyme is probably virus encoded. Appearance of enzyme activity coincided with the onset of host DNA degradation after PBCV-1 infection. We propose that the PBCV-1-induced restriction endonuclease participates in host DNA degradation and is part of a virus-induced restriction and modification system in PBCV-1-infected Chlorella cells.We have previously characterized a large polyhedral virus, PBCV-1, which infects and replicates in a unicellular, eucaryotic Chlorella-like green alga, strain NC64A. The virus contains a large double-stranded DNA genome (ca. 300 kilobase pairs as estimated by summing restriction fragments), at least 50 structural proteins, and a lipid component (22,29). The virus can be assayed by plaque formation, and milligram quantities can be produced in culture (27, 28). PBCV-1 infection is synchronous, and progeny virus is first released at 3 to 4 h postinfection; by 6 to 8 h virus release is complete. The virus has a burst size of 200 to 350 PFU per cell (28).Studies on DNA synthesis after PBCV-1 infection established that viral DNA synthesis begins about 45 min after infection; host DNA synthesis ceases immediately after infection, and host nuclear and chloroplast DNAs are degraded beginning about 60 min after infection (26). Base analyses of Chlorella nuclear and PBCV-1 DNAs revealed that the host DNA contains 21% 5-methyldeoxycytidine