In a model system employing Chinese hamster V-79 cells, the DNA synthesis inhibitor 3'-azido-3'-deoxythymidine (BW A509U, AZT) was shown to induce genome-wide DNA hypermethylation, low-frequency silencing of thymidine kinase (TK; EC 2.7.1.21) gene expression, and resistance to AZT. Twenty-four hours of exposure of V-79 cells to 150 microM AZT led to > 2-fold enhancement of genomic 5-methylcytosine levels and produced TK- epimutants at a rate approximately 43-fold above background. Such AZT-induced TK- epimutants were shown to be severely reduced in their capacity to activate AZT to its proximate antiviral form, AZT 5'-monophosphate, as compared with the TK+ parental cell line from which they were derived. TK- clones isolated under these conditions were shown to be 9- to 24-fold more resistant to the cytotoxic effects of AZT than the parental TK+ cell line and showed collateral resistance to 5-fluoro-2'-deoxyuridine. Three of four TK- epimutants could be reactivated at very high frequency (8-73%) to the TK+ AZT-sensitive phenotype by 24 hr of exposure to the demethylating agent 5-azadeoxycytidine (5-azadC), implying that drug-induced DNA hypermethylation, rather than classical mutation, was involved in the original gene-silencing event in these three clones. These 5-azadC-induced TK+ revertants concomitantly regained the ability to metabolize AZT to its 5'-monophosphate. RNA slot blot analyses indicated that the four AZT-induced TK- clones expressed 8.9%, 15.6%, 17.8%, and 11.1% of the parental level of TK mRNA. The three clones that were reactivatable by 5-azadC showed reexpression of TK mRNA to levels 84.4%, 51.1%, and 80.0% that of the TK+ parental cell line. These experiments show that one potential mechanism of drug resistance involves drug-induced DNA hypermethylation and resulting transcriptional inactivation of cellular genes whose products are required for drug activation.