In an earlier study it was discovered that when Friend erythroleukemia cells (FELC) were exposed to a variety of chemical agents capable of inducing differentiation, their DNA underwent genome-wide transient demethylation. In an attempt to elucidate the biochemical mechanism responsible for this phenomenon we have induced FELC with 5 mM hexamethylenebisacetamide and labeled the DNA in vivo with a density label, 5-bromodeoxyuridine, and a radioactive label, deoxy[5-3H]cytidine. Newly replicated DNA (heavy-light) was separated from parental DNA (light-light) by isopycnic centrifugation. Incorporation of deoxy[5-3H]cytidine into light-light duplex DNA has been observed only in induced cells concomitantly with the demethylation of the DNA, whereas, in parallel experiments, deoxy[G-3H]adenosine was not incorporated into light-light DNA. It was also found that the labeling of light-light DNA with deoxy[5-3H]cytidine is transient since the 3H label was removed from the DNA during the period of de novo DNA methylation that follows the demethylation. These results, taken together, strongly suggest that the demethylation of the DNA during differentiation is achieved by an enzymatic mechanism whereby 5-methylcytosine is replaced by cytosine.