The Sau1 type I restriction-modification system is found on the chromosome of all nine sequenced strains of Staphylococcus aureus and includes a single hsdR (restriction) gene and two copies of hsdM (modification) and hsdS (sequence specificity) genes. The strain S. aureus RN4220 is a vital intermediate for laboratory S. aureus manipulation, as it can accept plasmid DNA from Escherichia coli. We show that it carries a mutation in the sau1hsdR gene and that complementation restored a nontransformable phenotype. Sau1 was also responsible for reduced conjugative transfer from enterococci, a model of vancomycin resistance transfer. This may explain why only four vancomycin-resistant S. aureus strains have been identified despite substantial selective pressure in the clinical setting. Using a multistrain S. aureus microarray, we show that the two copies of sequence specificity genes (sau1hsdS1 and sau1hsdS2) vary substantially between isolates and that the variation corresponds to the 10 dominant S. aureus lineages. Thus, RN4220 complemented with sau1hsdR was resistant to bacteriophage lysis but only if the phage was grown on S. aureus of a different lineage. Similarly, it could be transduced with DNA from its own lineage but not with the phage grown on different S. aureus lineages. Therefore, we propose that Sau1 is the major mechanism for blocking transfer of resistance genes and other mobile genetic elements into S. aureus isolates from other species, as well as for controlling the spread of resistance genes between isolates of different S. aureus lineages. Blocking Sau1 should also allow genetic manipulation of clinical strains of S. aureus.