Eukaryotic genomes contain 5-methylcytosine (5mC) as a rare base.5mC arises by postsynthetic modification of cytosine and occurs, at least in animals, predominantly in the dinucleotide CpG. The base is not distributed randomly in these genomes but conforms to a pattern. This pattern varies between taxa but appears to be inherited in a semi-conservative fashion. At the level of the genome, gross changes in the level of DNA methylation have been noted. This has encouraged speculation that the modification may play a role in cellular differentiation. Tissue-specific patterns of DNA methylation, predicted by various models of differentiation, have been found for most vertebrate genes so far examined. A correlation has emerged between the undermethylation of these regions and their transcription, but this is not always the case. While data for eukaryotic viral sequences are less equivocal, studies of this kind cannot in isolation distinguish between undermethylation being a cause or a consequence of gene activity. If it were a cause, it is probable that the demethylation of specific CpG sites would be a necessary yet not a sufficient condition for transcription to occur. The introduction of artificially methylated DNA sequences into individual eukaryotic cells by microinjection or transformation may provide the means to elucidate these questions in the future. In the meantime, the study of eukaryotic DNA methylation promises to contribute much to our understanding of the regulation of gene expression in these organisms.