The biological importance of class I histocompatibility antigens in a large variety of immune mechanisms is widely recognized, and their role in tumor rejection has been proven in several experimental tumor systems. Reduced expression of class I antigens, which is correlated with enhanced tumorigenicity, was shown in these systems to be mainly the result of transcriptional down-regulation. Mouse embryonal fibroblasts expressing H-2 antigens and the product of a miniature swine class I transgene, transformed by adenovirus 12, exhibit low levels of all class I antigens on the cell surface. Half of the cell lines demonstrate a suppressed level of class I mRNAs. Cell lines derived from transformation with the early region of adenovirus 5 express a high level of class I antigens. DNAs from adenovirus-transformed cells are extensively hypermethylated both in the 5′ and the coding regions of the transgene compared to DNAs from immortalized cell lines and primary embryonal fibroblasts. Nevertheless, hypermethylation of these sequences is not correlated with mRNA level or cell-surface expression of the transgene product. Treatment of the transformed cells with high concentration of 5-azacytidine (5 Aza-C) induced merely a minor enhancement in the expression of class I mRNAs and class I antigens. Thus, this system is a perfect example of where viral transformation is associated with induced methylation of a class I gene, but hypermethylation does not affect its expression. The role of de novo methylation of genes in this system might be associated with transformation, or generation of mutations in CpG-rich sequences.