There is no doubt that alterations in the DNA methylating machinery play an important role in the development of cancer. DNA methylation is part of the inheritable epigenetic system that influences expression or silencing of genes necessary for normal differentitation and proliferation. Gene activity is associated with demethylation. In mammalian genomes, it is usually only cytosine residues within a 5′-CpG-3′ dinucleotide that are methylated. The methyl group is transferred from the methyl donor S-adenosylmethionine by the enzyme 5-methyltransferase, When cytosine is methylated it becomes susceptible to spontaneous deamination or mutation. In this review we summarize current understanding of the biological functions of DNA methylation, how it is brought about and how dysregulation of the methylating machinery may cause cancer. Consistent findings in cancer cells include hypomethylation of bulk DNA, focal genomic hypermethylation, and overexpression of a 5-methyltransferase gene. These alterations may contribute to tumorigenesis in a number of ways. For example, some of the focal hypermethylated regions contain tumor suppressor genes that may become silenced and susceptible to spontaneous mutation, whereas hypomethylation may allow activation of normally quiescent genes, Moreover, recent evidence indicates that methyltransferase itself, in the absence of the methyl donor 5-adenosylmethionine, increase the mutational rate of nonmethylated cytosine residues, thus increasing the chance of mutational events in the bulk of the demethylated genome. Results of studies into the significance of dysregulation of DNA methylation will provide new approaches to the diagnosis, prognosis, and treatment of cancer.