O(6)-Methylguanine-DNA methyltransferase (MGMT) is a DNA repair protein that removes alkyl DNA adducts such as those induced by alkylating agents. Loss of MGMT expression through transcriptional silencing by hypermethylation of its CpG island (CGI) is found in diverse human cancers including glioblastomas. Glioblastomas that have MGMT methylation respond to temozolomide, an alkylating agent, resulting in improved survival. Consequently, assessment of MGMT methylation has become a therapy response and prognostic indicator. However, it is not clear whether the region of the MGMT CGI commonly analysed is the critical region involved in transcriptional control. We measured methylation levels at each CpG site for the entire MGMT CGI using bisulfite modification and pyrosequencing, and compared them with MGMT mRNA expression in glioblastoma cell lines, xenografts and normal brain tissues (41 samples). Two critical regions were identified (DMR1 and DMR2). DMR2 encompasses the commonly analysed region and was always methylated when DMR1 was methylated. A luciferase reporter assay showed that substitutions of several specific CpG sites within DMR2 significantly attenuated the promoter activity of the MGMT CGI. Our results indicate that several CpG sites within DMR2 play a critical role in the transcriptional control of MGMT, making DMR2 the optimal target for methylation testing. However, given the highly variable patterns of MGMT methylation associated with transcriptional silencing observed in this region among the tumours in this study, methylation levels need to be measured at a number of individual CpGs within DMR2 to confidently predict transcriptional silencing and thus sensitivity to alkylating agents.