Methylation of CpG sites in the control regions of tumor suppressor genes may be an important mechanism for their heritable, yet reversible, transcriptional inactivation. These changes in methylation may impair the proper expression and/or function of cell cycle regulatory genes and confer a selective growth advantage to affected cells. Detailed methylation analysis using genomic bisulfite sequencing was performed on a series of subclones of a bladder cancer cell line in which a hypermethylated p16 gene had been reactivated by transient treatment with 5-aza-2'-deoxycytidine. Methylation of the CpG island in the promoter of the p16 gene in human bladder cancer cells did not stop the formation of a transcript initiated 20 kb upstream by the p19 promoter but did prevent the expression of a p16 transcript. Furthermore, we show that reactivant clones that expressed p16 at varying levels contained heterogeneous methylation patterns, suggesting that p16 expression can occur even in the presence of a relatively heavily methylated coding region. We also present the first functional evidence that methylation of only a small number of CpG sites can significantly down-regulate p16 promoter activity, thus providing support for the model of progressive inactivation of this tumor suppressor gene by DNA methylation.