N3-methylcytidine (m3C) is present in both eukaryotic tRNA and mRNA and plays critical roles in many biological processes. We report the synthesis of the m3C phosphoramidite building block and its containing RNA oligonucleotides. The base-pairing stability and specificity studies show that the m3C modification significantly disrupts the stability of the Watson-Crick C:G pair. Further m3C decreases the base pairing discrimination between C:G and the other mismatched C:A, C:U, and C:C pairs. Our molecular dynamic simulation study further reveals the detailed structural insights into the m3C:G base pairing pattern in an RNA duplex. More importantly, the biochemical investigation of m3C using reverse transcription in vitro shows that N3-methylation specifies the C:A pair and induces a G to A change using HIV-1-RT, MMLV-RT, and MutiScribe-RT enzymes, all with relatively low replication fidelity. For other reverse transcriptases with higher fidelity like AMV-RT, the methylation could completely shut down DNA synthesis. Our work provides detailed insights into the thermostability of m3C in RNA and a foundation for developing new molecular tools for mapping m3C in different RNA contexts and exploring the biochemical and biomedical potentials of m3C in the design and development of RNA based therapeutics.