5-Aza-2'-deoxycytidine (5-aza-dC) is a nucleoside analogue with cytotoxic and DNA demethylating effects. Here we show that 5-aza-dC induces the proteasomal degradation of free (non-chromatin bound) DNMT1 through a mechanism which is dependent on DNA synthesis and the targeting of incorporated 5-aza-dC residues by DNMT1 itself. Thus, 5-aza-dC induces Dnmt1 degradation in wild-type mouse ES cells, but not in Dnmt [3a(-/-), 3b(-/-)] mouse ES cells which express Dnmt1 but lack DNA methylation (<0.7% of CpG methylated) and contain few hemi-methylated CpG sites, these being the preferred substrates for Dnmt1. We suggest that adducts formed between DNMT1 and 5-aza-dC molecules in DNA induce a ubiquitin-E3 ligase activity which preferentially targets free DNMT1 molecules for degradation by the proteasome. The proteasome inhibitor MG132 prevents DNMT1 degradation and reduces hypomethylation induced by 5-aza-dC.