The mouse cellular retinoic acid binding protein-I (CRABP-I) gene is specifically up-regulated by retinoic acid (RA) in P19 mouse embryonal carcinoma cells, and its expression in animals is spatially and temporally restricted to RA-sensitive tissues during embryonic development. This study demonstrates that, in adult mouse tissues and P19 cells where the expression of CRABP-I is detected at the basal level, the 5'-flanking region of the CRABP-I gene is hypermethylated at the C residues of all the H p a I1 sites. Conversely, in mouse embryos during early stages of development when the expression of CRABP-I gene is detected at a much higher level, this region is demethylated at these H p a I1 sites. In P19, enhancement on the RA-induced up-regulation of CRABP-I can be observed in cells treated with 5-azacytidine (5-AzaC) in conjunction with RA, where partial demethylation in the 5'-flanking region of CRABP-I gene is observed. Nuclear run-on experiments indicate that increased message levels of CRABP-I in P19 cells can be accounted for, at least partially, by increases in its transcription rates. The induction of retinoic acid receptor (RAR) p by RA can also be enhanced by 5-AzaC, but to a much lesser degree. In contrast, all the H p a I1 sites in the structural gene portion, at least in the first two exons, are fully demethylated at the C residues. o 1994 WiIey-Liss, Inc.