The lysozyme (LZM) gene provides a very useful model for studies of phagocyte maturation, because its protein synthesis is increased during myelopoiesis and thus most abundant in terminally differentiated and activated phagoyctes. LZM gene expression and DNA methylation were examined in various normal and transformed hematopoietic cells. Two shifts toward LZM gene demethylation coincided with upregulation of expression: activation of expression in myeloid precursor cells was associated with significant demethylation at a CpG dinucleotide within an Alu repeat in the 5' flanking region; high-level expression in different types of mature phagocytic cells was associated with complete demethylation at two additional, intragenic CpG sites contained in Alu sequences. The possibility that methylation changes occurring within the 5' region of the human lysozyme gene could be involved in the transcription of this gene is discussed, as well as a possible role for demethylation in the maintenance of distinct maturation stages during phagocyte development.