The expression of the chondromodulin-I (ChM-I) gene, a cartilage-specific gene, is regulated by the binding of Sp3 to the core promoter region, which is inhibited by the methylation of CpG in the target genome in the osteogenic lineage, osteosarcoma (OS) cells. The histone tails associated with the hypermethylated promoter region of the ChM-I gene were deacetylated by histone deacetylase 2 (HDAC2) in three ChM-I-negative OS cell lines. Treatment with an HDAC inhibitor induced the binding of Sp3 in one cell line, which became ChM-I-positive. This process was associated with acetylation instead of the dimethylation of historic H3 at lysine 9 (H3-K9) and, surprisingly, the demethylation of the core promoter region. The demethylation was transient, and gradually replaced by methylation after a rapid recovery of histone deacetylaion. These results represent an example of the plasticity of differentiation being regulated by the cell-specific plasticity of epigenetic regulation. (c) 2007 Elsevier Inc. All rights reserved.