Expression of rat placental lactogen I is specific to the placenta and never expressed in other tissues. To obtain insight into the mechanism of tissue-specific gene expression, we investigated the methylation status in 3.4 kb of the 5'-flanking region of the rat placental lactogen I gene. We found that the distal promoter region of the rat placental lactogen I gene had more potent promoter activity than that of the proximal area alone, which contains several possible cis-elements. Although there are only 17 CpGs in the promoter region, in vitro methylation of the reporter constructs caused severe suppression of reporter activity, and CpG sites in the placenta were more hypomethylated than other tissues. Coexpression of methyl-CpG-binding protein with reporter constructs elicited further suppression of the reporter activity, whereas treatment with trichostatin A, an inhibitor of histone deacetylase, reversed the suppression caused by methylation. Furthermore, treatment of rat placental lactogen I nonexpressing BRL cells with 5-aza-2'-deoxycytidine, an inhibitor of DNA methylation, or trichostatin A resulted in the de novo expression of rat placental lactogen I. These results provide evidence that change in DNA methylation is the fundamental mechanism regulating the tissue-specific expression of the rat placental lactogen I gene.