Genetic mutation of genes that inhibit the formation of tumours has long been known to be one of the main driving forces in the development of cancer. Inactivation of one such gene, E-cadherin, is thought to be an important step in the development of most, or all, epithelial derived tumour types. Mutations within the E-cadherin gene have been identified as the cause of familial gastric cancer and loss of expression of E-cadherin has been found to be widespread in sporadically occurring epithelial tumours. Despite this, mutations of the E-cadherin gene have been only rarely found in most types of sporadic cancers. However, recent evidence has identified a second mechanism potentially responsible for inactivation of E-cadherin, and other important genes, during tumourigenesis, namely DNA methylation. This review will examine the importance of genetic (mutation) versus epigenetic (DNA methylation) mechanisms in the inactivation of E-cadherin during tumour development and also discuss potential differences in the functional consequences between inactivation by epigenetic or genetic means.