DNA methyltransferase 1 (DNMT1) plays an important role in the inheritance of genomic DNA methylation, which is coupled to the DNA replication process. Early embryonic lethality in DNMT1-null mutant (Dnmt1 c ) mice indicates that DNA methylation is essential for mammalian development. DNMT1, however, interacts with a number of transcriptional regulators and has a transcriptional repressor activity independent of its catalytic activity. To examine the roles of the catalytic activity of DNMT1 in vivo, we generated a Dnmt1 ps allele that expresses a point-mutated protein that lacks catalytic activity (DNMT1-C1229S). Dnmt1 ps mutant mice showed developmental arrest shortly after gastrulation, near-complete loss of DNA methylation, and an altered distribution of repressive chromatin markers in the nuclei; these phenotypes are quite similar to those of the Dnmt1 c mutant. The mutant DNMT1 protein failed to associate with replication foci in Dnmt1 ps cells. Reconstitution experiments and replication labeling in Dnmt1 ؊/؊ Dnmt3a ؊/؊ Dnmt3b ؊/؊ (i.e., unmethylated) embryonic stem cells revealed that preexisting DNA methylation is a major determinant for the cell cycledependent localization of DNMT1. The C-terminal catalytic domain of DNMT1 inhibited its stable association with unmethylated chromatin. Our results reveal essential roles for the DNA methylation mark in mammalian development and in DNMT1 localization.The methylation of DNA at the C-5 position of cytosine residues is a heritable epigenetic mechanism that is involved in a broad range of biological processes in vertebrates, plants, and fungi (3). In mammals, DNA methylation is coordinately regulated by three DNA methyltransferases, DNMT1, DNMT3A, and DNMT3B (6), and plays a crucial role in the regulation of gene expression, the silencing of parasitic elements, genomic imprinting, and embryogenesis (3). The hypermethylation of promoter CpG islands in tumor suppressor genes is a wellrecognized feature of many cancers (28). Mammalian genomes are mostly methylated at symmetrical CpG sites, and the pattern of methylated CpGs is thought to propagate through the copying of a template parental strand (3). After semiconservative DNA replication, hemi-methylated CpG sites are recognized and preferentially methylated at cytosine on the opposite, nascent DNA strand.DNMT1 is the major enzyme responsible for the stable inheritance of DNA methylation patterns after DNA replication (21, 27). Inactivation of DNMT1 results in extensive loss of DNA methylation in the mouse (32, 34). DNMT1 has a strong preference for hemi-methylated DNA as a substrate. The major isoform of mouse DNMT1 is a 1,620-amino-acid protein that has a large N-terminal regulatory domain, which contains several functional subdomains, and a C-terminal catalytic domain, separated by a linker region, a Lys-Gly (KG)repeat. The N-terminal regulatory domain and the C-terminal catalytic domain can interact directly with each other (17). This intramolecular interaction seems to be required for the enzymatic function ...