Several lines of evidence strongly suggest that DNA methylation is involved in embryo development. Perhaps the most direct evidence comes from experiments with methyltransferase deficient mice. Embryos that express low levels of the maintenance methyltransferase do not develop to term and die at the 5 to 20 somite stage corresponding to the level of the enzyme. In the mouse, dramatic methylation changes have been observed during the early steps of embryo development. Most genes are subject to a process of active demethylation starting promptly after fertilization. Except for a small number of methylated CpG sites in imprinted genes the vast majority of the sites are unmethylated by the stage of cavitation (16 cell). Such genome-wide demethylation may signify an erasure of epigenetic information originating in the highly differentiated gametes. This erasure may be essential for the establishment of a pluripotent state, before specific cell lineages can be determined. The process of laying down a new developmental program involves, initially, global de novo methylation at the stage of pregastrulation followed by gene specific demethylations associated with the onset of activity of these genes. CpG islands characteristic of housekeeping genes, appear to be protected from the global de novo methylation. An exception to this rule is the hypermethylation of CpG islands in X-linked housekeeping genes on the inactive X chromosome and of specific differentially methylated CpG sites in imprinted genes. Primordial germ cells escape the global de novo methylation which takes place at the pregastrula stage and undergo a very similar de novo methylation process in the differentiated gonads (15.5-18.5 days post coitum), forming the methylation patterns which are specific to the gametes. Specific demethylations then form a terminal methylation pattern which is then clonaly inherited in the soma and erased after fertilization.