Epigenetic modifications at the histone level affect gene regulation in response to extracellular signals. However, regulated epigenetic modifications at the DNA level, especially active DNA demethylation, in gene activation are not well understood. Here we report that DNA methylation/demethylation is hormonally switched to control transcription of the cytochrome p450 27B1 (CYP27B1) gene. Reflecting vitamin-D-mediated transrepression of the CYP27B1 gene by the negative vitamin D response element (nVDRE), methylation of CpG sites ((5m)CpG) is induced by vitamin D in this gene promoter. Conversely, treatment with parathyroid hormone, a hormone known to activate the CYP27B1 gene, induces active demethylation of the (5m)CpG sites in this promoter. Biochemical purification of a complex associated with the nVDRE-binding protein (VDIR, also known as TCF3) identified two DNA methyltransferases, DNMT1 and DNMT3B, for methylation of CpG sites, as well as a DNA glycosylase, MBD4 (ref. 10). Protein-kinase-C-phosphorylated MBD4 by parathyroid hormone stimulation promotes incision of methylated DNA through glycosylase activity, and a base-excision repair process seems to complete DNA demethylation in the MBD4-bound promoter. Such parathyroid-hormone-induced DNA demethylation and subsequent transcriptional derepression are impaired in Mbd4(-/-) mice. Thus, the present findings suggest that methylation switching at the DNA level contributes to the hormonal control of transcription.