This paper tests the hypothesis that expression of the DNA methyltransferase, dnmt1, gene is regulated by a methylation-sensitive DNA element. Methylation of DNA is an attractive system for feedback regulation of DNA methyltransferase as the final product of the reaction, methylated DNA, can regulate gene expression in cis. We show that an AP-1-dependent regulatory element of dnmt1 is heavily methylated in most somatic tissues and in the mouse embryonal cell line, P19, and completely unmethylated in a mouse adrenal carcinoma cell line, Y1. dnmt1 is highly over expressed in Y1 relative to P19 cell lines. Global inhibition of DNA methylation in P19 cells by 5-azadeoxycytidine results in demethylation of the AP-1 regulatory region and induction of dnmt1 expression in P19cells, but not Y1 cells. We propose that this regulatory region of dnmt1 acts as a sensor of the DNA methylation capacity of the cell. These results provide an explanation for the documented coexistence of global hypomethylation and high levels of DNA methyltransferase activity in many cancer cells and for the carcinogenic effect of hypomethylating diets.