Site-specific hypermethylation of tumor suppressor genes accompanied by genome-wide hypomethylation are epigenetic hallmarks of malignancy. However, the molecular mechanisms that drive these linked changes in DNA methylation remain obscure. DNA methyltransferase 1 (DNMT1), the principle enzyme responsible for maintaining methylation patterns is commonly dysregulated in tumors. Replication foci targeting sequence (RFTS) is an N-terminal domain of DNMT1 that inhibits DNA-binding and catalytic activity, suggesting that RFTS deletion would result in a gain of DNMT1 function. However, a substantial body of data suggested that RFTS is required for DNMT1 activity. Here, we demonstrate that deletion of RFTS alters DNMT1-dependent DNA methylation during malignant transformation. Compared to full-length DNMT1, ectopic expression of hyperactive DNMT1-DRFTS caused greater malignant transformation and enhanced promoter methylation with condensed chromatin structure that silenced DAPK and DUOX1 expression. Simultaneously, deletion of RFTS impaired DNMT1 chromatin association with pericentromeric Satellite 2 (SAT2) repeat sequences and produced DNA demethylation at SAT2 repeats and globally. To our knowledge, RFTS-deleted DNMT1 is the first single factor that can reprogram focal hypermethylation and global hypomethylation in parallel during malignant transformation. Our evidence suggests that the RFTS domain of DNMT1 is a target responsible for epigenetic changes in cancer.