Aberrant cytosine methylation affects regulation of hundreds of genes during cancer development. In this study, a novel aberrantly hypermethylated CpG island in cancer was discovered within the TOX2 promoter. TOX2 was unmethylated in normal cells but 28% lung (n = 190) and 23% breast (n = 80) tumors were methylated. Expression of two novel TOX2 transcripts identified was significantly reduced in primary lung tumors than distant normal lung (p<0.05). These transcripts were silenced in methylated lung and breast cancer cells and 5-Aza-2-deoxycytidine treatment re-expressed both. Extension of these assays to TOX, TOX3, and TOX4 genes that share similar genomic structure and protein homology with TOX2 revealed distinct methylation profiles by smoking status, histology, and cancer type. TOX was almost exclusively methylated in breast (43%) than lung (5%) cancer, whereas TOX3 was frequently methylated in lung (58%) than breast (30%) tumors. TOX4 was unmethylated in all samples and showed the highest expression in normal lung. Compared to TOX4, expression of TOX, TOX2 and TOX3 in normal lung was 25, 44, and 88% lower, respectively, supporting the premise that reduced promoter activity confers increased susceptibility to methylation during lung carcinogenesis. Genome-wide assays revealed that siRNA-mediated TOX2 knockdown modulated multiple pathways while TOX3 inactivation targeted neuronal development and function. Although these knockdowns did not result in further phenotypic changes of lung cancer cells in vitro, the impact on tissue remodeling, inflammatory response, and cell differentiation pathways suggest a potential role for TOX2 in modulating tumor microenvironment.