Many studies have detailed the repressive effects of DNA methylation on gene expression. However, the mechanisms that promote active demethylation are just beginning to emerge. Here, we show that methylation of the rDNA promoter is a dynamic and reversible process. Demethylation of rDNA is initiated by recruitment of Gadd45a (growth arrest and DNA damage inducible protein 45 alpha) to the rDNA promoter by TAF12, a TBP-associated factor that is contained in Pol I- and Pol II-specific TBP-TAF complexes. Once targeted to rDNA, Gadd45a triggers demethylation of promoter-proximal DNA by recruiting the nucleotide excision repair (NER) machinery to remove methylated cytosines. Knockdown of Gadd45a, XPA, XPG, XPF, or TAF12 or treatment with drugs that inhibit NER causes hypermethylation of rDNA, establishes heterochromatic histone marks, and impairs transcription. The results reveal a mechanism that recruits the DNA repair machinery to the promoter of active genes, keeping them in a hypomethylated state.