Gene silencing associated with aberrant methylation of promoter region CpG islands is one mechanism in which tumor suppressor genes are inactivated in human cancers. Recently, we identified a novel gene, Target of Methylation-associated Silencing-1 (TMS1) (also called ASC), which is aberrantly methylated and silenced in human breast cancers. To further investigate the mechanism of TMS1 silencing, we defined the transcription initiation site and detailed the DNA methylation pattern of the TMS1 CpG island in normal breast epithelial cells, breast cancer cell lines, and primary tumors. We find that in normal cells, the TMS1 CpG island lies within a 1.2 kb unmethylated domain, the 5' boundary of which is in close proximity to the transcription initiation site. In breast cancer cell lines, this boundary appeared to be unstable in that methylation tended to accumulate in the 5' end of the CpG island relative to normal epithelial cells. In contrast, the 3' methylation boundary remained intact. Gene silencing was not correlated with the methylation of specific CpG sites nor the inability to transactivate the TMS1 promoter, but was correlated with the percentage of alleles in the population exhibiting dense methylation across the entire CpG island. Using 5-aza-deoxycytidine to reactivate TMS1 in methylated and silent cell lines, and a cassette methylation strategy to determine the impact of methylation on different parts of the promoter, we find that demethylation of a small region immediately surrounding the transcription start site is critical to TMS1 expression. Our data support the idea that gene silencing and dense methylation are tightly coupled events that affect individual chromosomal copies of TMS1 in an all-or-none manner. The transition to this stably repressed state may be facilitated by spreading of methylation into the proximal promoter and direct effects of methylation on TMS1 transcription.