Most 5-methylcytosine in Neurospora crassa occurs in A:T-rich sequences high in TpA dinucleotides, hallmarks of repeat-induced point mutation. To investigate how such sequences induce methylation, we developed a sensitive in vivo system. Tests of various 25- to 100-bp synthetic DNA sequences revealed that both T and A residues were required on a given strand to induce appreciable methylation. Segments composed of (TAAA)(n) or (TTAA)(n) were the most potent signals; 25-mers induced robust methylation at the special test site, and a 75-mer induced methylation elsewhere. G:C base pairs inhibited methylation, and cytosines 5' of ApT dinucleotides were particularly inhibitory. Weak signals could be strengthened by extending their lengths. A:T tracts as short as two were found to cooperate to induce methylation. Distamycin, which, like the AT-hook DNA binding motif found in proteins such as mammalian HMG-I, binds to the minor groove of A:T-rich sequences, suppressed DNA methylation and gene silencing. We also found a correlation between the strength of methylation signals and their binding to an AT-hook protein (HMG-I) and to activities in a Neurospora extract. We propose that de novo DNA methylation in Neurospora cells is triggered by cooperative recognition of the minor groove of multiple short A:T tracts. Similarities between sequences subjected to repeat-induced point mutation in Neurospora crassa and A:T-rich repeated sequences in heterochromatin in other organisms suggest that related mechanisms control silent chromatin in fungi, plants, and animals.