Human NT2 cells, which differentiate into neurons and astrocytes, initially express and then permanently down-regulate Nanog and Oct-4 (POU5F1). We investigated the relationship between the expression of these genes and the methylation state of their 5'-flanking regions. Gene expression and DNA methylation were assayed with quantitative polymerase chain reaction and bisulfite genomic sequencing, respectively. Retinoic acid-induced differentiation of NT2 cells to neurons is accompanied by a sequential decrease in the expression of both genes, paralleled by sequential epigenetic modification of their upstream regions. This is the first report demonstrating changes in DNA methylation in the promoter regions of Nanog and Oct-4 in a human cell line.