A multitude of functions have evolved around cytosine within DNA, endowing the base with physiological significance beyond simple information storage. This versatility arises from enzymes that chemically modify cytosine to expand the potential of the genome. Cytosine can be methylated, oxidized, and deaminated to modulate transcription and immunologic diversity. At the crossroads of these modifications sit the AID/APOBEC family deaminases, which accomplish diverse functions ranging from antibody diversification and innate immunity to mRNA editing. In addition, novel roles have been proposed in oncogenesis and DNA demethylation. Behind these established and emerging physiologic activities remain important questions about the substrate specificity of these deaminases, reflecting a broader need to elucidate how AID/APOBEC enzymes engage their substrates for deamination. The work here addresses this larger question by focusing on the molecular basis of two important aspects of AID/APOBEC specificity: selectivity for DNA over RNA, and biochemical plausibility of deamination-coupled demethylation. To address these questions, we have synthesized chimeric nucleic acid substrates and characterized their reactivity with AID and the rest of the APOBEC family. With regards to nucleic acid selectivity, modifications to the 2'-position of the target nucleotide sugar significantly alter AID's reactivity. Strikingly, within a substrate that is otherwise DNA, a single RNA-like 2'-hydroxyl substitution at the target cytosine is sufficient to compromise deamination. Alternatively, modifications that favor a DNA-like conformation (or sugar pucker) are compatible with deamination. Inversely, with unreactive 2'-fluoro-RNA substrates, AID's deaminase activity was rescued by introducing a trinucleotide DNA patch spanning the target cytosine and two upstream nucleotides. With regards to demethylation, AID has substantially reduced activity on 5-methylcytosine relative to cytosine, its canonical substrate, and no detectable deamination of 5-hydroxymethylcytosine. This finding is explained by the reactivity of a series of modified substrates, where steric bulk at the 5-position was increasingly detrimental to deamination. We found that these nucleic acid determinants, localized to the nucleotide base and sugar, are conserved across the entire AID/APOBEC family. Taken together, we consolidate these findings into a unifying, mechanistic model for substrate engagement that clarifies the established and proposed functions of the AID/APOBEC family.