Intracisternal A-particle (IAP) expression in mouse cells has been correlated with hypomethylation of HhaI and Hpal sites in proviral long terminal repeats (LTRs). In a previous study, in vitro methylation of three HhaI sites in the U3 region of the LTR from the cloned genomic LAP element, MIA14, was shown to inhibit promoter activity in vivo. In this study, we found by site-directed mutagenesis that the two more downstream HhaI sites within this LTR were responsible for the methylation effects on promoter activity in vivo; methylation of the other (5') HhaI site, which lies within a putative SP1 binding domain, did not affect promoter activity. Methylation of the HhaI sites also inhibited promoter activity of the LTR in a cell-free transcription system. Exonuclease Im footprinting demonstrated methylation-induced changes in protein binding over the region encompassing the downstream HhaI site, designated the Enh2 domain. The protein that interacts specifically with this domain, EBP-80, was characterized in a previous study (M. Falzon and E. L. Kuff, J. Biol. Chem. 264:21915-21922, 1989). We show here that the presence of methylcytosine in the HhaI site within the Enh2 domain inhibited binding of EBP-80 in vitro. The methylated MIA14 LTR construct was much less responsive to added EBP-80 in an in vitro transcription system than was the unmethylated construct. These data suggest that CpG methylation within the Enh2 domain may exert its effect on transcription in vivo by altering the interaction between EBP-80 and its cognate DNA sequence.Site-specific promoter methylation causes gene inactivation in a number of viral and nonviral eucaryotic systems (for reviews, see references 10, 11, and 36). For example, in vitro methylation at specific sites interferes with expression of the a-globin gene (7, 37), the herpes simplex thymidine kinase gene (5), and the adenine phosphoribosyltransferase gene (26). DNA methylation has been implicated in the regulation of intracisternal A-particle (IAP) gene expression. Expression of IAP proviral elements in various normal and transformed mouse cells is inversely correlated with their methylation state (22,29,34) (Fig. 1). We show here by site-directed mutagenesis studies that only two of these sites (sites b and c; Fig. 1) are involved in the methylation effect.Methylation may influence LTR function by altering the interaction between one or more regulatory proteins and their binding sites. In this study, we show that the exonuclease III footprint of the HhaI-methylated LTR in the presence of crude nuclear extract is perturbed over one of the methylation sites (site c; Fig. 1). We also show that a purified DNA-binding protein (EBP-80) specific for the LTR region containing this site fails to bind to an oligonucleotide containing the methylated form of the HhaI site c. The MIA14 LTR methylated at the HhaI site c is a less effective * Corresponding author.promoter of transcription in vitro than is its unmethylated counterpart and responds poorly to added EBP-80. These results provid...