The conserved U54 in tRNA is often modified to 5-methyluridine (m(5)U) and forms a reverse Hoogsteen base pair with A58 that stabilizes the L-shaped tRNA structure. In Gram-positive and some Gram-negative eubacteria, m(5)U54 is produced by folate/FAD-dependent tRNA (m(5)U54) methyltransferase (TrmFO). TrmFO utilizes N-5,N-10-methylenetetrahydrofolate (CH2THF) as a methyl donor. We previously reported an in vitro TrmFO assay system, in which unstable [C-14]CH2THF was supplied from [C-14]serine and tetrahydrofolate by serine hydroxymethyltransferase. In the current study, we have improved the TrmFO assay system by optimization of enzyme and substrate concentrations and introduction of a filter assay system. Using this assay, we have focused on the tRNA recognition mechanism of TrmFO. 42 tRNA mutant variants were prepared, and experiments with truncated tRNA and microhelix RNAs revealed that the minimum requirement of TrmFO exists in the T-arm structure. The positive determinants for TrmFO were found to be the U54U55C56 sequence and G53-C61 base pair. The gel mobility shift assay and fluorescence quenching showed that the affinity of TrmFO for tRNA in the initial binding process is weak. The inhibition experiments showed that the methylated tRNA is released before the structural change process. Furthermore, we found that A38 prevents incorrect methylation of U32 in the anticodon loop. Moreover, the m(1)A58 modification clearly accelerates the TrmFO reaction, suggesting a synergistic effect of the m(5)U54, m(1)A58, and s(2)U54 modifications on m(5)s(2)U54 formation in Thermus thermophilus cells. The docking model of TrmFO and the T-arm showed that the G53-C61 base pair is not able to directly contact the enzyme.