Expression of insulin-like growth factor-binding protein-3, which (IGFBP-3) inhibits the proliferation of non-small-cell lung cancer (NSCLC) cells by inducing apoptosis, is lost in about half of stage I NSCLC cases. Since promoter methylation can silence gene expression, we investigated whether hypermethylation of the IGFBP-3 promoter is involved in loss of IGFBP-3 expression in NSCLC. We found the IGFBP-3 promoter to be methylated in seven of 13 NSCLC cell lines and in 16 of 23, seven of 9, eight of 11, and six of six tumor specimens from patients with stage I, II, III, and IV NSCLC, respectively. Methylation status correlated with IGFBP-3 mRNA and protein levels in a subset of NSCLC cell lines tested in our study. However, treatment with 5'-aza-2'-deoxycytidine (5'-aza-dC) restored IGFBP-3 expression in four of seven NSCLC cell lines with the methylated promoter, suggesting that multiple mechanisms regulate IGFBP-3 expression in NSCLC. Gel shift and chromatin immunoprecipitation assays showed that methylation of the Sp-1/Sp-3-binding element in the IGFBP-3 promoter influenced the binding of Sp-1, methyl-CpG-binding protein-2 (MeCP2), and histone deacetylase (HDAC). A luciferase construct expressing IGFBP-3 promoter in which the Sp-1/Sp-3 binding element was methylated showed significantly reduced transcriptional activity. The reduction in promoter activity was further suppressed by overexpression of MeCP2, which was rescued by 5'-aza-dC. Thus interference with Sp-1 transactivation by MeCP2 may contribute to the transcriptional defect of IGFBP-3 expression in NSCLC cells with methylated promoter.