DNA methylation is the only known mechanism for an epigenetic genomic DNA modification that is capable of altering gene expression. A recent study reveals that the pattern of CpG island methylation is largely characteristic of tumor type, suggesting that distinct sets of genes are inactivated by methylation during development of each tumor type. We compared previously the methylation status between normal liver and liver tumors in SV40 T/t antigen transgenic mice (MT-D2 mice) using Restriction Landmark Genomic Scanning for Methylation (RLGS-M) and identified several loci/spots that appeared to be methylated frequently in liver tumors. One of these spots, B236, identified a locus on chromosome 12 (D12Ncvs7) syntenic with human 14q12-q21 that is frequently lost in certain human cancers. Shotgun sequencing of a bacterial artificial chro mosome clone containing this spot/locus was performed to identify genes within this region. The Genescan program predicted an open reading frame of a novel, intron-less gene adjacent to the B236 spot that encodes a putative 493-amino acid protein containing the SNAG repressor motif in the NH2-terminal region and five C2H2-type zinc finger motifs in the COOH-terminal half. This putative gene, methylated in liver tumor (mlt 1), is a novel member of the SNAG transcriptional repressor family with 43% amino acid identity to insulinoma-associated protein 1. An open reading frame encoding a protein quite similar to mouse mlt 1 (56% amino acid identity) was located in the syntenic region of the human genome, indi cating that mlt 1 is evolutionarily conserved in human. Northern blot analysis revealed that mlt 1 is normally expressed in brain, spleen, stom ach, and liver. However, mlt 1 expression was silenced in the liver tumors of MT-D2 mice. The putative promoter region of mlt 1 is unmethylated in normal tissues but methylated in all liver tumors from 11 MT-D2 mice We also found that mlt 1 was methylated and not expressed in N18TG-22 cells, a mouse neuroblastoma cell line. Treatment of N18TG-2 cells with a demethylating agent, 5-aza-deoxycytidine, resulted in an expression of mlt 1, indicating that the repression of mlt 1 is attributable to methylation Thus, mlt 1 is a novel target gene that is silenced by methylation during liver tumorigenesis initiated by SV40 T antigen.