CpG island methylation is an epigenetic modification of DNA associated with the silencing of gene transcription. The p16INK4a (p16) tumor suppressor gene is inactivated in human non-small cell lung cancers (NSCLCs) by either homozygous deletion or aberrant methylation. Inactivation of tumor suppressor genes by methylation has been linked in part to altered activity of the cytosine DNA-methyltransferase (DNA-MTase), the enzyme that catalyzes DNA methylation at CpG sites. The purpose of these studies was to define the role of DNA-MTase and p16 in the development of murine lung cancer. DNA-MTase activity was determined in alveolar type II and Clara cells from A/J and C3H mice that exhibit high and low susceptibility, respectively, for lung tumor formation. Increased DNA-MTase activity leading to an increase in overall DNA methylation was found only in alveolar type II cells, the target for murine adenocarcinomas. Both DNA-MTase and DNA methylation changes were detected 7 days after carcinogen exposure and, thus, were early events in neoplastic evolution. In addition, enzyme activity increased incrementally during lung cancer progression. Expression of p16 was detected in all primary lung tumors from A/J mice; however, levels of expression differed by up to 15-fold between tumors. The apparent low levels of expression seen in approximately half of the tumors was not attributed to methylation of the p16 gene. In contrast to the detection of p16 expression in primary tumors, this gene was deleted in four tumor-derived cell lines induced in the A/J mouse by NNK. The results from these studies indicate that the modulation of DNA-MTase activity was cell specific, segregated with susceptibility, and occurred early in neoplastic evolution. Thus, the marked increase in enzyme activity detected in alveolar type II cells after carcinogen treatment could be a major factor contributing to the high susceptibility for chemical-induced neoplasia associated with the A/J mouse strain. The inactivation of the p16 gene in murine cancers induced by NNK most likely arises as a late event via homozygous deletion.