The regulation of gene transcription is not simply dependent on the presence or absence of DNA-binding transcription factors that turn genes on or off, but also involves processes determining the ability of transcription factors to gain access to and bind their target DNA. Methylation of DNA cytosine bases leads to the inaccessibility of DNA regulatory elements to their transcription factors by a number of mechanisms. Our understanding of DNA methylation has advanced rapidly in recent years with the identification of an increasingly large number of novel proteins involved in this process. These include methylcytosine-binding proteins as well as additional members of the DNA methyltransferase family. The creation of mice with targeted deletions in a number of genes involved in DNA methylation has further elucidated the functions of many of these proteins. The characterization of complexes that contain proteins known to be involved in DNA methylation has led to the identification of additional proteins, especially those involved in histone deacetylation, indicating that DNA methylation and histone deacetylation very likely act in a synergistic fashion to regulate gene transcription. Finally, the implication of DNA methylation in tumorigenesis and the realization that some congenital diseases are caused by deficiency of proteins involved in DNA methylation has confirmed the importance of this process in regulating gene expression.