A better understanding of key molecular changes during transformation of lung epithelial cells could affect strategies to reduce mortality from lung cancer. This study uses an in vitro model to identify key molecular changes that drive cell transformation and the likely clonal outgrowth of preneoplastic lung epithelial cells that occurs in the chronic smoker. Here, we show differences in transformation efficiency associated with DNA repair capacity for two hTERT/cyclin-dependent kinase 4, immortalized bronchial epithelial cell lines after low-dose treatment with the carcinogens methylnitrosourea, benzo(a)pyrene-diolepoxide 1, or both for 12 weeks. Levels of cytosine-DNA methyltransferase 1 (DNMT1) protein increased significantly during carcinogen exposure and were associated with the detection of promoter hypermethylation of 5 to 10 genes in each transformed cell line. Multiple members of the cadherin gene family were commonly methylated during transformation. Stable knockdown of DNMT1 reversed transformation and gene silencing. Moreover, stable knockdown of DNMT1 protein before carcinogen treatment prevented transformation and methylation of cadherin genes. These studies provide a mechanistic link between increased DNMT1 protein, de novo methylation of tumor suppressor genes, and reduced DNA repair capacity that together seem causal for transformation of lung epithelial cells. This finding supports the development of demethylation strategies for primary prevention of lung cancer in smokers.