To study the mechanism of gene repression by DNA methylation, M13 gene constructs were methylated to completion and inserted into mouse L cells by DNA-mediated gene transfer. All unmethylated sequences, regardless of their source, integrated into the DNA in a potentially active DNAase I-sensitive conformation. Total CpG methylation prevented the formation of this structure and rendered these sequences DNAase I-insensitive over the entire methylated domain. Whereas unmethylated DNA demonstrated additional conformational features of active genes, such as DNAase I hypersensitivity and restriction endonuclease-sensitive segments, these markers were not present when methylated DNA was used for transfection. The use of micrococcal nuclease to probe for active or inactive supranucleosome particles also showed that DNA methylation directs DNA into an inactive type of structure. The results suggest that DNA methylation may exert its effect on gene transcription by altering both specific and nonspecific interactions between DNA and nuclear proteins.