The pattern of DNA methylation plays an important role in regulating different genome functions. To test the hypothesis that DNA methylation is a reversible biochemical process, we purified a DNA demethylase from human cells that catalyzes the cleavage of a methyl residue from 5-methyl cytosine and its release as methanol. We show that similar to DNA methyltransferase, DNA demethylase shows CpG dinucleotide specificity, can demethylate mdCpdG sites in different sequence contexts, and demethylates both fully methylated and hemimethylated DNA. Thus, contrary to the commonly accepted model, DNA methylation is a reversible signal, similar to other physiological biochemical modifications.