Approx. 20% of human tumor cell lines (termed Mer-) are deficient in the DNA repair enzyme O6-methylguanine-DNA methyltransferase (MGMT; E.C.126.96.36.199). Such cells possess the MGMT gene and promoter sequences but have virtually no mRNA or protein. Cytosine methylation of gene sequences has been proposed as a mechanism by which MGMT could be suppressed in Mer- cells; however, the experimental evidence does not uniformly support this idea. We therefore investigated the effect of in vitro methylation of the MGMT promoter in a reporter gene construct transfected into cultured human cells. DNA methylation by HpaII or HhaI methylases suppressed the activity of the promoter, although the effect was not absolute. The occurrence of partial intracellular demethylation of promoter sequences may account for the incomplete inhibition of transcription. A model that attempts to reconcile the opposing views on the role of cytosine methylation in MGMT gene expression is presented.