Southern hybridization studies using a (CACAG)\sb5 indicated the presence of two loci carrying CACAG repeat sequences on the P. haemolytica A1 genome. Further hybridization studies using genomic DNA from P. haemolytica and related microorganisms indicated that the repeats are only present in P. haemolytica and P. trehalosi T3. PCR amplification, of one of the loci, designated Rep2, and sequence analysis indicated that the number of CACAG repeats could change upon serial subculture and this is most likely a result of DNA slipped-strand mispairing. A plasmid carrying the Rep2 locus was isolated and characterized. Sequence analysis indicated that the CACAG repeats are contained within the 5\sp′ end of a gene that showed homology to mod genes of type III restriction-modification systems. A second open reading frame dowstream was identified which showed homology to res genes of type III restriction-modification systems. Both Mod and Res could be expressed and polypeptides of appropriate sizes were detected by SDS-PAGE. Restriction activity could also be detected in crude cytoplasmic extracts of E. coli strains carrying the mod and res genes on recombinant plasmids.