One or more proteins in mammalian reovirus core particles mediate two RNA methylation activities, (guanosine-7-N)-methyltransferase and (guanosine-2'-O)-methyltransferase, that contribute to forming the 5' cap 1 structure on viral mRNA. We used UV irradiation to identify core proteins that bind S-adenosyl-L-methionine (SAM), the methyl-group donor for both methyltransferases. A [methyl-3H]SAM-binding site was observed among the reovirus lambda proteins; was shown to be specific by competition with low levels of S-adenosyl-L-homocysteine, the product of methyl-group transfer from SAM; and was subsequently localized to protein lambda2. lambda2 mediates the guanylyltransferase reaction in cap formation and was previously proposed to mediate one or both methylation reactions as well. SAM binding was demonstrated for both lambda2 in cores and lambda2 expressed in insect cells from a recombinant baculovirus. Using three different methods to cleave lambda2, a binding site for SAM was tentatively localized to a central region of lambda2, between residues 792 and 1100, which includes a smaller region with sequence similarity to the SAM-binding pocket of other methyltransferases. Alanine substitutions at positions 827 and 829 within this predicted binding region greatly reduced the capacity of baculovirus-expressed lambda2 protein to undergo UV cross-linking to SAM but had no effects on either the guanylyltransferase activity of this protein or its conformation as judged by partial proteolysis, suggesting that one or both of these residues is essential for SAM binding. Based on these findings, we propose that the two methyltransferase activities involved in mRNA capping by reovirus cores utilize a single SAM-binding pocket within a central region of lambda2.