Transcription of the pap pilin (papA) gene in Escherichia coli is subject to control by a heritable phase variation mechanism in which alternation between transcriptionally active (phase on) and inactive (phase off) states occurs. Our results suggest that phase switching occurs without DNA rearrangement of pap DNA sequences, distinguishing this system from those described for E. coli type 1 pili and Salmonella flagellar phase variation. Analysis of the regulatory region upstream of papA in DNAs isolated from phase off and phase on cell populations showed that two deoxyadenosine methylase (Dam) sites, GATC1028 and GATC1130, were present. Southern blot analysis of MboI and DpnI restriction digests of DNAs showed that the GATC1028 site was unmethylated only in DNA isolated from phase on populations. Conversely, GATC1130 sites were unmethylated in DNA isolated from phase off populations. The presence of unmethylated GATC sites in E. coli is unusual and to our knowledge has not been previously reported. These results suggest that the methylation states of GATC1028 and GATC1130 may regulate pap transcription. Consistent with this hypothesis, Dam methylase levels affected the regulation of pap transcription; papA transcription was absent in dam- E. coli. Moreover, transition from the phase off to phase on state was not observed in E. coli expressing aberrantly high levels of Dam. A basic model is presented which outlines a possible mechanism by which alternation between phase off and phase on methylation states could occur.