Sleeping Beauty transposon (SB-Tn) has emerged as an important nonviral vector for integrating transgenes into mammalian genomes. We report here a novel dual fluorescent reporter cis SB-Tn system that permitted nonselective fluorescent-activated cell sorting for SB-Tn-transduced K562 erythroid cells. Using an internal ribosome entry site element, the green fluorescent protein (eGFP) was linked to the SB10 transposase gene as an indirect marker for the robust expression of SB10 transposase. Flourescence-activated cell sorting (FACS) by eGFP resulted in significant enrichment (>60%) of cells exhibiting SB-Tn-mediated genomic insertions and long-term expression of a DsRed transgene. The hybrid erythroid-specific promoter of DsRed transgene was verified in erythroid or megakaryocyte differentiation of K562 cells. Bisulfite-mediated genomic analyses identified different DNA methylation patterns between DsRed(+) and DsRed(-) cell clones, suggesting a critical role in transgene expression. Moreover, although the host genomic copy of the promoter element showed no CpG methylation, the same sequence carried by the transgene was markedly hypermethylated. Additional evidence also suggested a role for histone deacetylation in the regulation of DsRed transgene. The presence of SB transgene affected the expression of neighboring host genes at distances >45 kb. Our data suggested that a fluorescent reporter cis SB-Tn system can be used to enrich mammalian cells harboring SB-mediated transgene insertions. The observed epigenetic changes also demonstrated that transgenes inserted by SB could be selectively modified by endogenous factors. In addition, long-range activation of host genes must now be recognized as a potential consequence of an inserted transgene cassette containing enhancer elements.