Genome-wide DNA hypomethylation was one of the first epigenetic alterations described in cancer cells. However, the cause of this hypomethylation is still poorly understood. We have previously developed a line of primary mesenchymal stem cells (MSC, the putative origin of various types of sarcoma) in which five oncogenic steps toward a fully transformed state are sequentially introduced including: human telomerase, inactivation of p53 and pRb tumor suppressor genes and activation of the oncogenes c-Myc and H-Ras. We hypothesized that DNA hypomethyation would occur during stepwise transformation of MSC and could be a model to investigate the mechanism of global hypomethylation in cancer. Here we show, firstly, that satellite-2 and long interspersed nuclear element 1 repetitive elements became hypomethylated (54 and 30% reduction, respectively) on the introduction of oncogenic H-Ras after the final step of transformation. Secondly, we observed hypomethylation only after 4 weeks in culture following the introduction of H-Ras, suggesting a gradual loss of methylation. Finally, using an inducible estrogen receptor-Ras fusion construct, we were able to transform MSC's in the absence of detectable hypomethylation, suggesting that it was not a requirement for transformation. These studies show that DNA hypomethylation can occur late during stepwise transformation, although in vitro transformation could also take place in the absence of hypomethylation. These data support the hypothesis that DNA hypomethylation occurs via a gradual mechanism and is not a requirement for transformation.