Trypanosomatids contain an unusual DNA base J (beta-d-glucosylhydroxymethyluracil), which replaces a fraction of thymine in telomeric and other DNA repeats. To determine the function of base J, we have searched for enzymes that catalyze J biosynthesis. We present evidence that a protein that binds to J in DNA, the J-binding protein 1 (JBP1), may also catalyze the first step in J biosynthesis, the conversion of thymine in DNA into hydroxymethyluracil. We show that JBP1 belongs to the family of Fe(2+) and 2-oxoglutarate-dependent dioxygenases and that replacement of conserved residues putatively involved in Fe(2+) and 2-oxoglutarate-binding inactivates the ability of JBP1 to contribute to J synthesis without affecting its ability to bind to J-DNA. We propose that JBP1 is a thymidine hydroxylase responsible for the local amplification of J inserted by JBP2, another putative thymidine hydroxylase.