Helicobacter pylori is a common human pathogen that causes gastroduodenal diseases. H. pylori genome consists of numerous restriction-modification (R-M) genes. It is established that N6-adenine methylation plays a crucial role in bacterial gene regulation and virulence, but not much is known about the role of C5-cytosine methylation. In this study, we examined the influence of an orphan cytosine methyltransferase, hpyAVIBM on gastric infection in mice and cultured cells. Histopathological staining showed that the deletion of hpyAVIBM in H. pylori strain SS1 had increased damaging hemorrhagic effects on the mice stomach. The gelatin-zymography result demonstrated that the mice infected with mutant SS1ΔhpyAVIBM had significantly up-regulated pro-MMP-9 than those infected with SS1. Additionally, ELISA results of pro-inflammatory cytokines proved that mutant strain caused significantly more inflammatory effect on mice stomach than its wild-type counterpart. The immunohistochemistry data showed that mutant strain caused attenuated epithelial cell damage. Co-culture studies of H. pylori with AGS (Human Gastric Adenocarcinoma cell line) cells revealed that SS1ΔhpyAVIBM instigated significantly more apoptotic death in the AGS cells compared to the wild-type strain. Our results indicated that DNA methylation by hpyAVIBM plays a crucial role in modulating virulence factors in bacterial cells and their interaction with the host cells.