We previously reported isolation of the mouse gene, Mest (mesoderm-specific transcripts), which is mapped to the proximal part of chromosome 6 and predominantly expressed in the mesoderm and its derivatives during development. Peg1, a paternally expressed gene isolated by a systematic screening of imprinted genes, was recently demonstrated to be identical to Mest. We and others have shown that the human homolog (MEST) of Mest is also imprinted so as to be expressed from the paternal copy and maps to 7q32. To study transcriptional regulation of Mest/Peg1, we examined the effect of DNA methylation on its expression. In the embryonal carcinoma (EC) cell line, MC12, from which Mest was originally isolated, the 5'-region harboring presumptive promoter of the gene was undermethylated. On the other hand, C4XX, a subclone of MC12 which had lost expression of Mest, was characterized by extremely high levels of methylation in the 5'-region, demethylation of which resulted in activation of Mest. Furthermore, a methylated reporter construct with the luciferase gene under the control of the putative promoter region of Mest was not competent to produce luciferase activity in MC12 cells. These results suggest a suppressive role for DNA methylation in Mest expression. However, neither methylated nor unmethylated reporter constructs showed luciferase activity in a primary culture from the adult kidney, in which Mest is down-regulated despite apparent unmethylation of the paternal allele. Taken together, the data suggest that there are probably two modes of regulation for the Mest gene; one being a methylation-dependent mechanism that regulates imprinted expression of Mest during development, and the other being a methylation-independent mechanism that is involved in down-regulation of Mest in adult tissues.