Methyl-accepting assays and a sensitive method for labeling specific CpG sites have been used to show that the DNA of F9 embryonal carcinoma cells decreases in 5-methylcytosine content by ca. 9% during retinoic acid-induced differentiation, whereas the DNA of dimethyl sulfoxide-induced Friend murine erythroleukemia (MEL) cells loses ca. 3.8% of its methyl groups. These values correspond to the demethylation of 2.2 X 10(6) and 0.9 X 10(6) 5'-CpG-3' sites per haploid genome in differentiating F9 and MEL cells, respectively. Fluorography of DNA restriction fragments methylated in vitro and displayed on agarose gels showed that demethylation occurred throughout the genome. In uninduced F9 cells, the sequence TCGA tended to be more heavily methylated than did the sequence CCGG, whereas this tendency was reversed in MEL cells. The kinetics of in vitro DNA methylation reactions catalyzed by MEL cell DNA methyltransferase showed that substantial numbers of hemimethylated sites accumulate in the DNA of terminally differentiating F9 and MEL cells, implying that a partial loss of DNA-methylating activity may accompany terminal differentiation in these two cell types.