Abstract Background Epigenetic control is essential for maintenance of tissue hierarchy and correct differentiation. In cancer, this hierarchical structure is altered and epigenetic control deregulated, but the relationship between these two phenomena is still unclear. CD133 is a marker for adult stem cells in various tissues and tumour types. Stem cell specificity is maintained by tight regulation of CD133 expression at both transcriptional and post-translational levels. In this study we investigated the role of epigenetic regulation of CD133 in epithelial differentiation and cancer. Methods DNA methylation analysis of the CD133 promoter was done by pyrosequencing and methylation specific PCR; qRT-PCR was used to measure CD133 expression and chromatin structure was determined by ChIP. Cells were treated with DNA demethylating agents and HDAC inhibitors. All the experiments were carried out in both cell lines and primary samples. Results We found that CD133 expression is repressed by DNA methylation in the majority of prostate epithelial cell lines examined, where the promoter is heavily CpG hypermethylated, whereas in primary prostate cancer and benign prostatic hyperplasia, low levels of DNA methylation, accompanied by low levels of mRNA, were found. Moreover, differential methylation of CD133 was absent from both benign or malignant CD133 + /α 2 β 1 integrin hi prostate (stem) cells, when compared to CD133 - /α 2 β 1 integrin hi (transit amplifying) cells or CD133 - /α 2 β 1 integrin low (basal committed) cells, selected from primary epithelial cultures. Condensed chromatin was associated with CD133 downregulation in all of the cell lines, and treatment with HDAC inhibitors resulted in CD133 re-expression in both cell lines and primary samples. Conclusions CD133 is tightly regulated by DNA methylation only in cell lines, where promoter methylation and gene expression inversely correlate. This highlights the crucial choice of cell model systems when studying epigenetic control in cancer biology and stem cell biology. Significantly, in both benign and malignant prostate primary tissues, regulation of CD133 is independent of DNA methylation, but is under the dynamic control of chromatin condensation. This indicates that CD133 expression is not altered in prostate cancer and it is consistent with an important role for CD133 in the maintenance of the hierarchical cell differentiation patterns in cancer.