Global hypomethylation of genes and repetitive sequences, as well as hypermethylation of certain genes known to be involved in tumor suppression, are observed concurrently in cancer cells. Aberrant expression of DNA methyltransferase 1 (dnmt1) is a downstream effector of multiple tumorigenic pathways, and several data suggest that dnmt1 plays a causal role in these pathways. These data raise two critical questions: Why does ectopic expression of dnmt1 transform cells? and How can global hypomethylation exist in a cell that bears high levels of DNMT1 activity? It is proposed that DNMT1 induces cellular transformation by a mechanism that does not involve DNA methylation and that the low level of methylation in cancer cells is a result of induction of a DNA demethylase in these cells. Both DNMT1 and the demethylase play a causal role in cellular transformation and are candidate anticancer targets.