We previously demonstrated several lines of evidence indicating that early growth response 2 (EGR2) functions as a tumor suppressor, partly on the basis that its expression was often decreased in human tumors and cancer cell lines. Here we report a possible molecular mechanism to account for down-regulation of EGR2 in tumor cells. Although no genetic mutations in the gene or alterations in methylation status of its promoter were detected, we found a high degree of methylation at CpG islands in intron 1 of EGR2 in cell lines that were expressing this gene at a high level. Moreover, reporter gene experiments revealed that methylated intron 1 had somehow conferred enhancer-like activity. The data imply the existence of a previously unsuspected mechanism of gene expression regulation.