Decorin (DCN) has been suggested to display an anti-metastatic role by antagonizing bioactive TGF-β in advanced human cancers. However, the epigenetic mechanisms by which defective expression of DCN causes cancer metastasis remain unclear. We focused on non-small cell lung cancer (NSCLC) cell lines with low metastatic potential (95C) and high metastatic potential (95D), which share a similar genetic background. Quantitative PCR and clonal bisulfite sequencing indicated that the methylation levels of the +58CpG site in the DCN 5'-UTR region was significantly higher in 95D cells with low expression of DCN mRNA compared to 95C cells with high expression of DCN mRNA. In silico prediction and ChIP assay showed a correlation between +58CpG site and AhR, which was reported as a transcriptional activator. Importantly, EMSA and luciferase reporter gene assays suggested that +58CpG methylation specifically diminished the recruitment of AhR to DCN 5'-UTR sequence and caused a reduction of approximately 50% in transcriptional activity. At baseline, 95D cells exhibited higher p-Smad3 levels and lower E-cadherin expression when compared with 95C cells. The demethylating agent 5-Aza significantly led to restoration of DCN expression, reduced level of p-Smad3, increased expression of E-cadherin in 95D cells. Taken together, we identified the methylated +58CpG in DCN 5'-UTR associated with reduced expression of DCN mRNA, and revealed that +58CpG methylation may be one of the mechanisms accounting for reduced recruitment of the transcriptional activator AhR to DCN 5'-UTR, and suggest that this mechanism promotes TGF-β/Smad signaling by enhancing the phosphorylation of Smad3, thereby downregulating E-cadherin in NSCLC cells with high metastatic potential.