Metallothioneins (MTs) are a group of cysteine-rich stress response proteins that scavenge reactive oxygen species and heavy metals. Recently, we have shown that MT-I promoter is methylated and suppressed in some solid and liquid tumors and can be robustly activated following treatment with inhibitors of DNA methyltransferase (DNMT) and histone deacetylase (HDAC). Here, we have analyzed MT-I chromatin structure in active, unmethylated (Hepa cells) and in repressed, methylated state (lymphosarcoma cells). Restriction enzyme accessibility assay showed that the MT-I promoter has an open conformation in unmethylated state as opposed to refractory chromatin structure in methylated state. Positioning of nucleosomal arrays on the methylated promoter further confirmed the closed chromatin structure of the methylated promoter. Chromatin immunoprecipitation (ChIP) assay demonstrated that the unmethylated promoter is associated with K9-acetyl, K4-methyl, and S10-phospho histone H3 whereas the methylated promoter is predominantly associated with K9-methyl H3. HP1α that recognizes K9-methyl H3 inhibited methylated MT-1 promoter activity whereas closely related HP1γ repressed the promoter irrespective of its methylation status. Ubiquitously expressed DNA methyltransferase 1 (DNMT1) suppressed MT-I promoter activity irrespective of its methylation status that does not require its catalytic activity. The DNMT1-mediated repression of MT-I promoter was relieved by trichostatin A, an HDAC inhibitor. Among the methyl CpG binding proteins, MBD2 and MBD4 specifically associated with the methylated promoter and inhibited its activity. In contrast, MBD1 and MeCP2 interacted with both promoters and suppressed the promoter activity irrespective of its methylation status. These results demonstrate that the methylated and unmethylated MT-I promoter are differentially regulated by DNA methyltransferase and methyl-CpG binding proteins, and DNMT1 could suppress MT promoter by a transcriptional mechanism independent of its enzymatic function. These studies suggest that the components of epigenetic machinery differentially regulate methylated and unmethylated MT-I gene expression. J. Cell. Biochem. 97: 1300–1316, 2006. © 2005 Wiley-Liss, Inc.