Expression of the myeloperoxidase (MPO) gene is tightly regulated in a tissue- and development-specific manner. Accumulation of MPO messenger RNA (mRNA) occurs only at the late myeloblastic and promyelocytic stages of myeloid differentiation and is negligible at other stages of myeloid development and in other tissues. The goal of our studies was to begin to understand the events that occur to control MPO gene expression during normal granulocytopoiesis. Chromatin structure of the MPO gene was evaluated by DNase I treatment of isolated nuclei and Southern blot analysis. No detectable DNase I hypersensitive sites were found in the region of the MPO gene in non-myeloid cells. One site was present in the 5′ upstream region in myeloid cells that are developmentally too immature to transcribe MPO. Three sites of hypersensitivity in the regions of the putative MPO promoter and upstream region occurred in MPO-expressing promyelocytes. These sites were markedly reduced in terminally differentiated, non-expressing myeloid cells. Analysis of DNA methylation of the MPO gene using methylation-sensitive restriction enzymes showed that the gene was highly methylated in non-myeloid cells. Stepwise demethylation occurred in myeloid cells developmentally too immature to transcribe MPO. Maximal demethylation in the 5′ gene region occurred in MPO-expressing promyelocytes. This methylation pattern did not change in terminally differentiated, MPO non-expressing myeloid cells. A somatic hybrid cell formed by fusion of HL-60 (MPO-expressing cells) and PUT (MPO non- expressing lymphoid cells) extinguished expression of MPO and showed a chimeric pattern of MPO gene methylation, suggesting that demethylation is necessary but not sufficient for expression of the MPO gene. Our studies show that demethylation and DNase I hypersensitivity of the MPO gene were associated with a tissue-dependent potential for MPO gene expression that preceded the developmental ability to express MPO mRNA.