Methylation at CpG dinucleotides to produce 5 methyl cytosine (5me-C) has been proposed to regulate the transcriptional expression of human Alu repeats. Similarly, methylation has been proposed to indirectly favor the transpositional activity of young Alu repeats by transcriptionally inactivating older Alu's through the very rapid transition of 5me-C to T. Both hypotheses are examined here by RNA polymerase III (Pol III) in vitro transcription of Alu templates using HeLa cell extracts. A limiting factor represses the template activity of methylated Alu repeats. Competition by methylated prokaryotic vector DNA's relieves repression, showing that the factor is not sequence specific. This competitor has no effect on the activity of unmethylated templates showing that the repressor is highly specific toward methylated DNA. While methylation of a single pair of CpG dinucleotides in the A box of the Poll III promoter is sufficient to cause repression, methylation elsewhere within the template also causes repression. The repressor causing these effects on the Pol III directed transcription of Alu repeats is thought to be a previously reported, repressor for Pol II directed templates. Young Alu repeats are transcriptionally more active templates than a representative older Alu subfamily member. Also, younger Alu's form stable transcriptional complexes faster, potentially giving them an additional advantage. The mutation of three CpG's to CpA's within and near the A box drastically decreases both the template activity and rate of stable complex formation by a young Alu member. The sensitivity of Alu template activity to CpG transitions within the A box partially explains the selective transpositional advantage enjoyed by young Alu members.