Abstract In a previous genomic analysis, using somatic methyltransferase (DNMT) knockout cells, we showed that hypomethylation decreased the expression of as many genes as were observed to increase, suggesting a previously unknown mechanism for epigenetic regulation. To address this idea, the expression of the BAG family genes was used as a model. These genes were used because their expression was decreased in DNMT1−/−, DNMT3B−/−, and double knockout cells and increased in DNMT1-overexpressing and DNMT3B-overexpressing cells. Chromatin immunoprecipitation analysis of the BAG-1 promoter in DNMT1-overexpressing or DNMT3B-overexpressing cells showed a permissive dimethyl-H3-K4/dimethyl-H3-K9 chromatin status associated with DNA-binding of CTCFL/BORIS, as well as increased BAG-1 expression. In contrast, a nonpermissive dimethyl-H3-K4/dimethyl-H3-K9 chromatin status was associated with CTCF DNA-binding and decreased BAG-1 expression in the single and double DNMT knockout cells. BORIS short hairpin RNA knockdown decreased both promoter DNA-binding, as well as BAG-1 expression, and changed the dimethyl-H3-K4/dimethyl-H3-K9 ratio to that characteristic of a nonpermissive chromatin state. These results suggest that DNMT1 and DNMT3B regulate BAG-1 expression via insulator protein DNA-binding and chromatin dynamics by regulating histone dimethylation. [Cancer Res 2008;68(8):2726–35]