The mouse Xist gene, which is expressed only from the inactive X chromosome, is thought to play a role in the initiation of X inactivation. The 5' end of this gene is fully methylated on the active X chromosome and completely demethylated on the inactive X chromosome, suggesting that DNA methylation may be involved in controlling allele-specific transcription of this gene. To directly investigate the importance of DNA methylation in the control of Xist expression, we have examined its methylation patterns and expression in ES cells and embryos that are deficient in DNA methyltransferase activity. We report here that demethylation of the Xist locus in male mutant embryos induces Xist expression, thus establishing a direct link between demethylation and expression of the Xist gene in the postgastrulation embryo. The transcriptional activity of Xist in undifferentiated ES cells, however, appears to be independent of its methylation status. These results suggest that methylation may only become essential for Xist repression after ES cells have differentiated or after the embryo has undergone gastrulation.