The immunoglobulin intragenic µ enhancer region acts as a locus control region that mediates transcriptional activation over large distances in germ line transformation assays. In transgenic mice, but not in transfected tissue culture cells, the activation of a variable region (V H ) promoter by the µ enhancer is dependent on flanking nuclear matrix attachment regions (MARs). Here, we examine the effects of DNA methylation, which occurs in early mouse development, on the function of the µ enhancer and the MARs. We find that methylation of rearranged µ genes in vitro, before transfection, represses the ability of the µ enhancer to activate the V H promoter over the distance of 1.2 kb. However, methylation does not affect enhancer-mediated promoter activation over a distance of 150 bp. In methylated DNA templates, the µ enhancer alone induces only local chromatin remodeling, whereas in combination with MARs, the µ enhancer generates an extended domain of histone acetylation. These observations provide evidence that DNA methylation impairs the distance independence of enhancer function and thereby imposes a requirement for additional regulatory elements, such as MARs, which facilitate long-range chromatin remodeling. Transcriptional activation of genes in mice has been shown to depend on enhancers or locus control regions (LCRs) (for review, see Dillon and Grosveld 1994;Martin et al. 1996). LCRs, described initially for the human -globin locus, are required for the formation of an "open," DNase I-sensitive chromatin domain before transcriptional activation (Forrester et al. 1987;Jimenez et al. 1992). In transgenic mice, LCRs are functionally defined as elements that mediate developmentally regulated expression of linked transgenes at physiological levels, independent of the site of chromosomal integration (Grosveld et al. 1987). In addition, these sequences overcome variegation of gene expression at the single cell level (Festenstein et al. 1996;Walters et al. 1996). LCRs have been identified in many genes and are composite sequence elements that typically contain an enhancer combined with auxiliary sequences. Although the role of enhancers in chromatin accessibility and transcriptional activation of linked promoters has been studied extensively (for review, see Blackwood and Kadonaga 1998), the functions of the auxiliary sequences remain obscure.The immunoglobulin µ heavy chain locus contains an intragenic enhancer region that can function as an LCR to activate a distal variable region (V H ) promoter or a heterologous promoter in germ-line transformation assays (Adams et al. 1985;Jenuwein and Grosschedl 1991). The 1-kb µ enhancer region includes a well-characterized transcriptional enhancer (for review, see Ernst and Smale 1995), the promoter for germ-line noncoding Iµ transcripts (Lennon and Perry 1985), and nuclear matrix attachment regions (MARs) that flank the enhancer on either side (Cockerill et al. 1987). In transgenic mice, the MARs augment the function of the µ enhancer in activating the V H promoter by...