Temozolomide (8-carbamoyl-3-methylimidazo[5,1d]-1,2,3,5-tetrazin-4-(3H)-one), an experimental antitumor agent which spontaneously decomposes to 5-(3,3-methyl-1-triazeno) imidazole-4-carboxamide, the active metabolite of the antineoplastic drug DTIC, causes erythroid differentiation of K562 leukemia cells. The increase in epsilon and gamma globin gene expression after temozolomide treatment does not appear to be due to drug-induced hypomethylation of the genes. In other genes containing many methylated sequences such as the proto-oncogenes c-myc and C-Ha-ras, temozolomide caused no detectable change in methylation. In contrast, in the same genes 5-aza-2'-deoxycytidine induced hypomethylation. Temozolomide caused DNA alkali-labile sites and an arrest of the cell cycle in G2 phase. Ethazolastone (its 3-ethylimidazo analogue) which does not cause differentiation of K562 produced no significant DNA damage and G2 phase blockade. DNA damage rather than hypomethylation may be responsible for induction of differentiation.