The conformational and energetic consequences of cytosine methylation in eukaryotes related to transcription or formation of chromatin structure are not well understood. Structures of methylated and unmethylated DNA sequences from biologically relevant sources were studied by theoretical methods under different ionic conditions and demonstrate that cytosine methylation produces a localized pattern of steric, hydrophobic, energetic, conformational and electrostatic alterations in DNA. These findings suggest how this modification may influence protein-DNA interactions and support current hypotheses. The results reveal previously unrecognized potential effects of cytosine methylation which could critically affect normal and neoplastic cellular processes by altering transcriptional events, histone binding, chromosomal stability and cellular differentiation.