Activation-induced cytidine deaminase (AID) is required for the maturation of antibodies in higher vertebrates, where it promotes somatic hypermutation (SHM), class switch recombination and gene conversion. While it is known that SHM requires high levels of transcription of the target genes, it is unclear whether this is because AID targets transcribed genes. We show here that the human AID promotes C to T mutations in Escherichia coli which are stimulated by transcription. The mutations are strand-biased and occur preferentially in the non-transcribed strand of the target gene. Human AID purified from E.coli is active without prior treatment with a ribonuclease and deaminates cytosines in plasmid DNA in vitro. Further, the action of this enzyme is greatly stimulated by the transcription of the target gene in a strand-dependent fashion. These results confirm the prediction that AID may act directly on DNA and show that it can act on transcribing DNA in the absence of specialized DNA structures such as R-loops. It suggests that AID may be recruited to variable genes through transcription without the assistance of other proteins and that the strand bias in SHM may be caused by the preference of AID for the non-transcribed strand.