Methylation of cytosines within the CpG dinucleotide by DNA methyltransferases is involved in regulating transcription and chromatin structure, controlling the spread of parasitic elements, maintaining genome stability in the face of vast amounts of repetitive DNA, and X chromosome inactivation. Cellular DNA methylation is highly compartmentalized over the mammalian genome and this compartmentalization is essential for embryonic development. When the complicated mechanisms that control which DNA sequences become methylated go awry, a number of inherited genetic diseases and cancer may result. Much new information has recently come to light regarding how cellular DNA methylation patterns may be established during development and maintained in somatic cells. Emerging evidence indicates that various chromatin states such as histone modifications (acetylation and methylation) and nucleosome positioning (modulated by ATP-dependent chromatin remodeling machines) determine DNA methylation patterning. Additionally, various regulatory factors interacting with the DNA methyltransferases may direct them to specific DNA sequences, regulate their enzymatic activity, and allow their use as transcriptional repressors. Continued studies of the connections between DNA methylation and chromatin structure and the DNA methyltransferase-associated proteins, will likely reveal that many, if not all, epigenetic modifications of the genome are directly connected. Such studies should also yield new insights into treating diseases involving aberrant DNA methylation.