Cd79a (called mb-1 here) encodes the Ig-alpha signaling component of the B cell receptor. The early B cell-specific mb-1 promoter was hypermethylated at CpG dinucleotides in hematopoietic stem cells but became progressively unmethylated as B cell development proceeded. The transcription factor Pax5 activated endogenous mb-1 transcription in a plasmacytoma cell line, but could not when the promoter was methylated. In this context, early B cell factor (EBF), a transcription factor required for B lymphopoiesis, potentiated activation of mb-1 by Pax5. EBF and the basic helix-loop-helix transcription factor E47 each contributed to epigenetic modifications of the mb-1 promoter, including CpG demethylation and nucleosomal remodeling. EBF function was enhanced by interaction with the transcription factor Runx1. These data suggest a molecular basis for the hierarchical dependence of Pax5 function on EBF and E2A in B lymphocyte development.