Mammalian genomes are compartmentalized into dense inactive chromatin that is hypermethylated and active open chromatin that is hypomethylated. It is generally accepted that this bimodal pattern of methylation is established during development and is then faithfully inherited through subsequent cell divisions by a maintenance DNA methyltransferase (DNMT1). The pattern of methylation is believed to direct local histone acetylation states. In contrast to this well accepted consensus, we show here using a transient transfection model that an active demethylase is involved in shaping patterns of methylation in somatic cells. Demethylase activity is directed by the state of histone acetylation, and therefore, the resulting methylation pattern is determined by local histone acetylation states contrary to the accepted model. Our data support a new model suggesting that the pattern of methylation is maintained by a dynamic balance of methylation and demethylation activities and the local state of histone acetylation. This provides a simple mechanism for explaining why active genes are not methylated.