Cancer is a process driven by the accumulation of abnormalities in gene function. While many of these changes are genetic, epigenetically mediated changes in gene expression are being increasingly appreciated. This latter process emphasizes the need to understand two key components of heritable, but reversible, modulation of gene promoter function that are closely tied to one another - formation of chromatin which modulates transcription and establishing patterns of DNA methylation. The link lies first in the recruitment to methylated cytosines of a family of methyl-CpG binding domain proteins (MBDs), which are direct transcriptional repressors and can complex with transcriptional corepressors including histone deacetylases (HDACs). Additionally, the proteins that catalyze DNA methylation, DNA methyltransferases (DNMTs), also directly repress transcription and associate with HDACs. Regulation of these above chromatin-DNA methylation interactions as a function of DNA replication timing is emerging as a key event in the inheritance of transcriptionally repressed domains of the genome. Importantly, synergy between HDAC activity and DNA methylation is operative for a key epigenetic abnormality in cancer cells, transcriptional silencing of tumor suppressor genes. This change has now been recognized for genes that are essential for normal regulation of virtually every major cell function including cell growth, differentiation, apoptosis, DNA repair, and cell-cell, cell-substratum interaction. Understanding the molecular determinants of both normal and abnormal patterns of chromatin formation and DNA methylation thus holds great promise for our understanding of cancer and for means to better diagnose, prevent, and treat this disease.