We have previously shown that the mouse c-H-ras gene acquires transforming activity in chemically induced skin tumours. We have now investigated the pattern of DNA methylation at HpaII and XhoI sites around the c-H-ras locus in various tissues and stages of epidermal tumour progression. The results of this study suggest a correlation between the methylation state of the c-H-ras gene and its susceptibility to oncogenic conversion by a point-mutation. The locus is substantially undermethylated in normal epidermis in comparison with NIH/3T3 fibroblasts. Intermediate levels of methylation were observed in the other tissues investigated. The undermethylation at HpaII sites in epidermal DNA persists through the morphologically distinct phases of hyperplasia, benign papilloma and malignant carcinoma. Methylation at a specific XhoI site close to the c-H-ras gene is significantly reduced with respect to normal epidermis in some, but not all epidermal tumours. The methylation state of the c-H-ras locus in specific tumours is stably maintained following transfection of these DNAs into NIH/3T3 cells and selection of transformed foci. Demethylation of the locus is not essential in vitro for the transforming activity of DNA from epidermal tumours. The significance of changes in the methylation pattern of the c-H-ras gene in different tissues and during tumour progression is discussed.