The alkyltransferase-like (ATL) proteins contain primary sequence motifs resembling those found in DNA repair O(6)-alkylguanine-DNA alkyltransferase proteins. However, in the putative active site of ATL proteins, a tryptophan (W(83)) residue replaces the cysteine at the known active site of alkyltransferases. The Escherichia coli atl gene was expressed as a fusion protein and purified. Neither ATL nor C(83) or A(83) mutants transferred [(3)H] from [(3)H]-methylated DNA to themselves, and the levels of O(6)-methyl guanine (O(6)-meG) in substrate DNA were not affected by ATL. However, ATL inhibited the transfer of methyl groups to human alkyltransferase (MGMT). Inhibition was reduced by prolonged incubation in the presence of MGMT, again suggesting that O(6)-meG in the substrate is not changed by ATL. Gel-shift assays show that ATL binds to short single- or double-stranded oligonucleotides containing O(6)-meG, but not to oligonucleotides containing 8-oxoguanine, ethenoadenine, 5-hydroxycytosine or O(4)-methylthymine. There was no evidence of demethylation of O(6)-meG or of glycosylase or endonuclease activity. Overexpression of ATL in E.coli increased, or did not affect, the toxicity of N-methyl-N'-nitro-N-nitrosoguanidine in an alklyltransferase-proficient and -deficient strain, respectively. These results suggest that ATL may act as a damage sensor that flags O(6)-meG and possibly other O(6)-alkylation lesions for processing by other repair pathways.