Small cell lung cancer (SCLC) is a highly aggressive, predominantly cigarette smoke-induced tumour with poor prognosis. The glucocorticoid receptor (GR), a SCLC tumour suppressor gene, is typically reduced in SCLC. We now show that SCLC cells express high levels of DNA methyltransferase 1 (DNMT1) which accumulates at the GR promoter. DNMT1 expression is further increased by exposure to the tobacco carcinogen NNK. In the untransformed human lung fibroblast cell line, MRC-5, short term NNK treatment decreases GRα mRNA and protein expression due to accumulation of DNMT1 at the GR promoter. Long term NNK treatment results in persistently augmented DNMT1 levels with lowered GR levels. Long term exposure to NNK slows cell proliferation and induces DNA damage, while the GR antagonist RU486 stimulates proliferation and protects against DNA damage. Although both NNK and RU486 treatment increases methylation at the GR promoter, neither are sufficient to prevent senescence in this context. NNK exposure results in accumulation of DNMT1 at the GR promoter in untransformed lung cells mimicking SCLC cells, directly linking tobacco smoke exposure to silencing of the GR, an important step in SCLC carcinogenesis.