Epigenetic modifications in bacteria, such as DNA methylation, have been shown to affect gene regulation, thereby generating cells that are isogenic but with distinctly different phenotypes. Restriction–modification (RM) systems contain prototypic methylases that are responsible for much of bacterial DNA methylation. This review focuses on a distinctive group of type I RM loci that , through phase variation, can modify their methylation target specificity and can thereby switch bacteria between alternative patterns of DNA methylation. Phase variation occurs at the level of the target recognition domains of the hsdS (specificity) gene via reversible recombination processes acting upon multiple hsdS alleles. We describe the global distribution of such loci throughout the prokaryotic kingdom and highlight the differences in loci structure across the various bacterial species. Although RM systems are often considered simply as an evolutionary response to bacteriophages, these multi-hsdS type I systems have also shown the capacity to change bacterial phenotypes. The ability of these RM systems to allow bacteria to reversibly switch between different physiological states, combined with the existence of such loci across many species of medical and industrial importance, highlights the potential of phase-variable DNA methylation to act as a global regulatory mechanism in bacteria.