In other words the enzyme should be such that it should be able to distinguish between foreign DNA and its own DNA. He gave the name restriction enzymes and hypothesized that these restriction enzymes can recognize and act at specific sites on the viral DNA. The next step in the discovery of restriction enzymes was taken by Smith et al (1970) when they isolated a restriction enzyme from the bacterium Haemophilus influezae. Smith showed that the restriction enzyme can cut the viral DNA at specific sites.

The entire DNA termini were, showing that these were cut from the double stranded DNA having the following sequence The restriction enzyme from Homophiles influenza can cut the DNA molecule which exhibit a twofold symmetry i.e., with a palindromic sequence (same sequence running in opposite directions). Some restriction endonucleases, there source, recognition sequence and sites of cleavage. Subsequent work by Daniel Nathans (1971) showed that the restriction enzyme discovered by Smith can cut the monkey virus DNA into eleven well defined pieces. By using specific restriction enzymes it is also possible to map the DNA which they cut as their specificity is known. Arber, Nathans and Smith were awarded the 1978 Noble prize in physiology and medicine for their work on restriction enzymes. In many microorganisms restriction enzymes are a means of protection against intrudent viral DNA.

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In the working of the restriction enzyme the nucleotide sequence of the host DNA is identified and methylated to avoid degradation. As a result of this the DNA gets the protection while the foreign DNA with the same sequence will not be methylated and consequently subjects itself for degradation. The whole mechanism is called the RM system (restriction modification) and is wide spread in bacteria.