The effect of DNA methylation at specific promoter sites on gene expression was tested by using a sensitive and quantitative assay system. The plasmid pSVO CAT contains the prokaryotic gene chloramphenicol acetyltransferase (CAT) and a HindIII site in front of it for experimental promoter insertion. Upon insertion into pSVO CAT, the E1a and protein IX gene promoters from adenovirus type 12 (Ad12) DNA were capable of mediating CAT expression upon transfection in mouse cells. In many viral and nonviral eukaryotic genes, DNA methylation at highly specific sites in the promoter region can attain a regulatory function in gene expression. One of the important sites is the 5' C-C-G-G 3' sequence. The CAT-promoting activity of the early simian virus 40 promoter in plasmid pSV2 CAT is refractory to methylation by the Hpa II or Hha I DNA methyltransferase at 5' C-C-G-G 3' or 5' G-C-G-C 3' sequences, respectively, because this promoter lacks such sites. The CAT coding sequence of this plasmid carries four Hpa II and no Hha I sites. Methylation of the Hpa II sites in the coding region does not affect expression. The E1a promoter of Ad12 DNA comprising the leftmost 525 base pairs of the viral genome carries two 5' C-C-G-G 3' and three 5' G-C-G-C 3' sites upstream from the leftmost "TATA" signal. Methylation of the Hpa II or Hha I sites incapacitates this promoter. The promoter of protein IX gene of Ad12 DNA contains one 5' C-C-G-G 3' and one 5' G-C-G-C 3' site downstream and two 5' G-C-G-C 3' sites greater than 300 base pairs upstream from the TATA motif and probably outside the promoter. The protein IX promoter is not inactivated by methylation of these sites. These data demonstrate that critical 5' methylations in the promoter region decrease or eliminate transcription; methylations of sites too far upstream or probably any sites downstream from the TATA site do not affect expression.