16S rRNA, isolated from Escherichia coli or synthesized in vitro, is methylated by tRNA (m5U54)-methyltransferase (RUMT) and S-adenosyl-L-methionine to give ribothymidine (m5U). By methylation studies of 16S rRNA fragments, nearest-neighbor analysis, and nuclease protection experiments, the site of methylation was identified as U788. We have previously shown that the substrate consensus sequence for the T-arm of tRNA consists of a 2-5 base-pair stem and a 7-base loop, with certain constraints on base substitutions within the loop, and in the first two bases which close the loop [Gu, X., & Santi, D. V. (1991) Biochemistry 30, 2999-3002]. U788 of 16S rRNA is within a 9-base loop of a predicted stem-loop structure of 16S rRNA. If Ado substitution is allowed at the third and seventh positions of the loop and the first and ninth bases of the loop form an A-C base pair, the resulting stem-loop falls within the RUMT consensus sequence of the T-arm of tRNA. Individual mutants of the tRNA T-arm at these positions confirm that the substitutions are allowable, and expand the previous consensus sequence. Further, prevention of 7-base loop formation by requiring C-C base-pair formation at the loop closure abolishes substrate activity. RUMT forms a complex with Syn 16S rRNA which can be isolated on nitrocellulose filters or by SDS-PAGE electrophoresis. The enzyme also catalyzes exchange of tritium of [3H]Ura-16S rRNA for protons of water. By analogy with studies with tRNA [Gu, X., & Santi, D. V. (1991) Biochemistry 31, 10295-10302], the mechanism of methylation is proposed to involve formation of a covalent, albeit reversible, Michael adduct with the target U788 of 16S rRNA.