We investigated the relationship between DNA cytosine methylation and the expression of two genes associated with resistance to DNA methylation damage. Variants of RajiMex- cells acquired resistance to N-methyl-N-nitrosourea by either reactivating a previously silent O6-methylguanine-DNA methyltransferase (MGMT) gene or by repressing the hMSH6 mismatch repair gene. DNA sequencing and measurements of mRNA and enzyme levels revealed that MGMT activity was not correlated with methylation of the core MGMT promoter. Treatment with the demethylating agent 5-azadeoxycytidine reduced MGMT mRNA and enzyme levels, indicating that methylation of some nonpromoter sequences may be required for MGMT gene expression. In contrast, both hMSH6 mRNA and protein levels were increased by 5-azadeoxycytidine treatment of an N-methyl-N-nitrosourea-resistant variant that did not express detectable hMSH6, which implies that this gene was transcriptionally silenced by cytosine methylation. This could be substantiated by in vitro modification of the CpG sites in the hMSH6 promoter with restriction methylase M.SssI, which abolished the transcription of a reporter gene under its control in a transient transfection assay. Taken together, our data show that treatment with chemical methylating agents alters gene expression patterns through increased CpG methylation of genomic DNA, and thereby permits the emergence and selection of clones that are resistant to these agents due to increased repair or tolerance of O6-methylguanine.