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The character of a cell is defined by its constituent proteins, which are the result of specific patterns of gene expression. Crucial determinants of gene expression patterns are DNA-binding transcription factors that choose genes for transcriptional activation or repression by recognizing the sequence of DNA bases in their promoter regions. Interaction of these factors with their cognate sequences triggers a chain of events, often involving changes in the structure of chromatin, that leads to the assembly of an active transcription complex (e.g., Cosma et al. 1999). But the types of transcription factors present in a cell are not alone sufficient to define its spectrum of gene activity, as the transcriptional potential of a genome can become restricted in a stable manner during development. The constraints imposed by developmental history probably account for the very low efficiency of cloning animals from the nuclei of differentiated cells (Rideout et al. 2001; Wakayama and Yanagimachi 2001). A “transcription factors only” model would predict that the gene expression pattern of a differentiated nucleus would be completely reversible upon exposure to a new spectrum of factors. Although many aspects of expression can be reprogrammed in this way (Gurdon 1999), some marks of differentiation are evidently so stable that immersion in an alien cytoplasm cannot erase the memory. The genomic sequence of a differentiated cell is thought to be identical in most cases to that of the zygote from which it is descended (mammalian B and T cells being an obvious exception). This means that the marks of developmental history are unlikely to be caused by widespread somatic mutation. Processes less irrevocable than mutation fall under the umbrella term “epigenetic” mechanisms. A current definition of epigenetics is: “The study of mitotically and/or meiotically heritable changes in gene function that cannot be explained by changes in DNA sequence” (Russo et al. 1996). There are two epigenetic systems that affect animal development and fulfill the criterion of heritability: DNA methylation and the Polycomb-trithorax group (Pc-G/trx) protein complexes. (Histone modification has some attributes of an epigenetic process, but the issue of heritability has yet to be resolved.) This review concerns DNA methylation, focusing on the generation, inheritance, and biological significance of genomic methylation patterns in the development of mammals. Data will be discussed favoring the notion that DNA methylation may only affect genes that are already silenced by other mechanisms in the embryo. Embryonic transcription, on the other hand, may cause the exclusion of the DNA methylation machinery. The heritability of methylation states and the secondary nature of the decision to invite or exclude methylation support the idea that DNA methylation is adapted for a specific cellular memory function in development. Indeed, the possibility will be discussed that DNA methylation and Pc-G/trx may represent alternative systems of epigenetic memory that have been interchanged over evolutionary time. Animal DNA methylation has been the subject of several recent reviews (Bird and Wolffe 1999; Bestor 2000; Hsieh 2000; Costello and Plass 2001; Jones and Takai 2001). For recent reviews of plant and fungal DNA methylation, see Finnegan et al. (2000), Martienssen and Colot (2001), and Matzke et al. (2001).