The effect of DNA methylation on the transcriptional activity of the hamster adenine phosphoribosyltransferase (aprt) and the herpes thymidine kinase (tk) genes has been investigated. By using M13 constructs containing these gene sequences, specific segments of each gene were methylated in vitro by restriction fragment primer-directed second-strand synthesis using the substrate 2'-deoxy-5-methyl-cytidine triphosphate (dmCTP). These hybrid-methylated molecules were inserted into mouse Ltk- cells by DNA-mediated cotransfer. In all cases, the integrated sequences retained the in vitro-directed methylation pattern. The aprt gene was inhibited by CpG methylation in the 5' region but was unaffected by methylation at the 3' end or in adjacent M13 sequences. In contrast to this, DNA methylation in both the 5' promoter region and the 3' structural region of the tk gene had a strong inhibitory effect. This suggests that this modification may affect transcription by mechanisms that do not involve the direct alteration of recognition sequences for RNA polymerase.