The immunoglobulin kappa gene is specifically demethylated during B-cell maturation in a process which utilizes discrete cis-acting modules such as the intronic kappa enhancer element and the matrix attachment region (MAR). While any MAR sequence is sufficient for this reaction, mutation analysis indicates that tissue specificity is mediated by kappaB binding sequences within the kappa intronic enhancer. The plasmacytoma cell line S107 lacks kappaB binding activity and fails to demethylate the kappa locus. However, B-cell specific demethylation is restored by the introduction of an active kappaB binding protein gene relB. This represents the first demonstration of a trans-acting factor involved in cell-type-specific demethylation, and suggests that the same protein-DNA recognition system used for transcription may also contribute to the earlier developmental events that bring about activation of the kappa locus.