Expression of serogroup B meningococcal capsular polysaccharide undergoes frequent phase variation involving reversible frameshift mutations within a homopolymeric repeat in the siaD gene. A high rate of phase variation is the consequence of a biochemical defect in methyl-directed mismatch repair. The mutator phenotype is associated to the absence of DNA adenine methyltransferase (Dam) activity in all pathogenic isolates and in 50% of commensal strains. Analysis of the meningococcal dam gene region revealed that in all Dam⁻ strains a gene encoding a putative restriction endonuclease (drg) that cleaves only the methylated DNA sequence 5′-GmeATC-3′ replaced the dam gene. Insertional inactivation of the dam and/or drg genes indicated that high rates of phase variation and hypermutator phenotype are caused by absence of a functional dam gene.