TRAG-3, originally identified as a taxol resistance-associated gene from an ovarian carcinoma cell line, is upregulated in many human tumors. Like many tumor antigens, TRAG-3 mRNA is not detectable or is expressed at very low levels in normal fetal and adult human tissues except for testis, where TRAG-3 mRNA transcripts are detected abundantly. TRAG-3 mRNA is frequently overexpressed in tumors but is rarely detected in adjacent normal tissues. To delineate the transcriptional regulation of this tumor antigen, we cloned and sequenced the TRAG-3 promoter. A 539-base pair fragment upstream of the initiation site, which contains two unusual CT repeat stretches, was sufficient to drive the maximum activity of a luciferase reporter gene. Sodium bisulfite sequencing of genomic DNA revealed that the amount of DNA methylation in exon 2 and in the promoter regions is inversely correlated with gene expression. In normal tissues, TRAG-3 is hypermethylated and is thus transcriptionally silenced. In those tumors where TRAG-3 is actively transcribed, the TRAG-3 promoter and exon 2 are hypomethylated. Treatment of a TRAG-3-silenced cell line H23 with the demethylating reagent 5-aza-cytosine reduced DNA methylation and induced TRAG-3 expression in a dose-dependent manner. These results indicate that DNA demethylation is an important epigenetic mechanism that regulates the TRAG-3 tumor antigen in human tumors.