Silencing of tumor-suppressor genes by hypermethylation of promoter CpG islands is well documented in human cancer and may be mediated by methyl-CpG-binding proteins, like MeCP2, that are associated in vivo with chromatin modifiers and transcriptional repressors. However, the exact dynamic between methylation and chromatin structure in the regulation of gene expression is not well understood. In this study, we have analyzed the methylation status and chromatin structure of three CpG islands in the p14(ARF)/p16(INK4A) locus in a series of normal and cancer cell lines using methylation-sensitive digestion, MspI accessibility in intact nuclei and chromatin immunoprecipitation (ChIP) assays. We demonstrate the existence of an altered chromatin structure associated with the silencing of tumor-suppressor genes in human cancer cell lines involving CpG island methylation, chromatin condensation, histone deacetylation and MeCP2 binding. The data showed that MeCP2 could bind to methylated CpG islands in both promoters and exons; MeCP2 does not interfere with transcription when bound at an exon, suggesting a more generalized role for the protein beyond transcriptional repression. In the absence of methylation, it is demonstrated that CpG islands located in promoters versus exons display marked differences in the levels of acetylation of associated histone H3, suggesting that chromatin remodeling can be achieved by methylation-independent processes and perhaps explaining why non-promoter CpG islands are more susceptible to de novo methylation than promoter islands.