A large fraction of the animal genome is maintained in a transcriptionally repressed state throughout development. By generating viable Dnmt1(-)(/)(-) mouse cells we have been able to study the effect of DNA methylation on both gene expression and chromatin structure. Our results confirm that the underlying methylation pattern has a profound effect on histone acetylation and is the major effector of me-H3(K4) in the animal genome. We demonstrate that many methylated genes are subject to additional repression mechanisms that also impact on histone acetylation, and the data suggest that late replication timing may play an important role in this process.