DNA methylation is essential for embryonic development and important for transcriptional repression, as observed in several biological phenomena. These include genomic imprinting, X-inactivation and carcinogenesis. The basic mechanism by which DNA methylation silences transcription is generally understood, but there is still much to be learned about how DNA methyltransferase is targeted to a specific region of the gene. Silencing by DNA methylation occurs at an early stage of carcinogenesis, when the DNA repair genes, MGMT and hMLH1, are frequently inactivated, resulting in mutations in key cancer-related genes in cells. Mice defective in Mgmt and/or Mlh1 gave clear evidence of the significant roles of these proteins in carcinogenesis. Recently, it has been demonstrated that DNA methylation is linked to histone methylation in fungi and plants, although it remains unknown whether this mechanism occurs in mammalian systems.