One of the most prevalent products of oxygen radical injury in DNA is 8-hydroxyguanosine. Cells must be able to withstand damage by oxygen radicals and possess specific repair mechanisms that correct this oxidative lesion. However, when these defenses are oversaturated, such as under conditions of high oxidative stress, or when repair is inefficient, the miscoding potential of this lesion can result in mutations in the mammalian genome. In addition to causing genetic changes, active oxygen species can lead to epigenetic alterations in DNA methylation, without changing the DNA base sequence. Such changes in DNA methylation patterns can strongly affect the regulation of expression of many genes. Although DNA methylation patterns have been found to be altered during carcinogenesis, little is known about the mechanism(s) that produce this loss of epigenetic controls of gene expression in tumors. Replacement of guanine with the oxygen radical adduct 8-hydroxyguanine profoundly alters methylation of adjacent cytosines, suggesting a role for oxidative injury in the formation of aberrant DNA methylation patterns during carcinogenesis. In this paper, we review both the genetic and epigenetic mechanisms of oxidative DNA damage and its association with the carcinogenic process, with special emphasis on the influence of free radical injury on DNA methylation.