The immune response to pathogens is regulated by a delicate balance of cytokines. The dysregulation of cytokine gene expression, including interleukin-12, tumor necrosis factor alpha, and gamma interferon (IFN-gamma), following human retrovirus infection is well documented. One process by which such gene expression may be modulated is altered DNA methylation. In subsets of T-helper cells, the expression of IFN-gamma, a cytokine important to the immune response to viral infection, is regulated in part by DNA methylation such that mRNA expression inversely correlates with the methylation status of the promoter. Of the many possible genes whose methylation status could be affected by viral infection, we examined the IFN-gamma gene as a candidate. We show here that acute infection of cells with human immunodeficiency virus type 1 (HIV-1) results in (i) increased DNA methyltransferase expression and activity, (ii) an overall increase in methylation of DNA in infected cells, and (iii) the de novo methylation of a CpG dinucleotide in the IFN-gamma gene promoter, resulting in the subsequent downregulation of expression of this cytokine. The introduction of an antisense methyltransferase construct into lymphoid cells resulted in markedly decreased methyltransferase expression, hypomethylation throughout the IFN-gamma gene, and increased IFN-gamma production, demonstrating a direct link between methyltransferase and IFN-gamma gene expression. The ability of increased DNA methyltransferase activity to downregulate the expression of genes like the IFN-gamma gene may be one of the mechanisms for dysfunction of T cells in HIV-1-infected individuals.