Activation-induced cytidine deaminase (AID) deaminates deoxycytidine (dC) to deoxyuracil (dU) at immunoglobulin loci in B lymphocytes to mediate secondary antibody diversification. Recently, AID has been proposed to also mediate epigenetic reprogramming by demethylating methylated cytidines (mC) possibly through deamination. AID overexpression in zebrafish embryos was shown to promote genome demethylation through G:T lesions, implicating a deamination-dependent mechanism. We and others have previously shown that mC is a poor substrate for human AID. Here, we examined the ability of bony fish AID to deaminate mC. We report that zebrafish AID was unique among all orthologs in that it efficiently deaminates mC. Analysis of domain-swapped and mutant AID revealed that mC specificity is independent of the overall high-catalytic efficiency of zebrafish AID. Structural modeling with or without bound DNA suggests that efficient deamination of mC by zebrafish AID is likely not due to a larger catalytic pocket allowing for better fit of mC, but rather because of subtle differences in the flexibility of its structure.