Embryonic stem (ES) cells are important tools in the study of gene function and may also become important in cell therapy applications. Establishment of stable XX ES cell lines from mouse blastocysts is relatively problematic owing to frequent loss of one of the two X chromosomes. Here we show that DNA methylation is globally reduced in XX ES cell lines and that this is attributable to the presence of two active X chromosomes. Hypomethylation affects both repetitive and unique sequences, the latter including differentially methylated regions that regulate expression of parentally imprinted genes. Methylation of differentially methylated regions can be restored coincident with elimination of an X chromosome in early-passage parthenogenetic ES cells, suggesting that selection against loss of methylation may provide the basis for X-chromosome instability. Finally, we show that hypomethylation is associated with reduced levels of the de novo DNA methyltransferases Dnmt3a and Dnmt3b and that ectopic expression of these factors restores global methylation levels.