Using the folate/methyl-deficient rat model of hepatocarcinogenesis, we obtained evidence that may provide new insights into a major unresolved paradox in DNA methylation and cancer research: the mechanistic basis for genome-wide hypomethylation despite an increase in DNA methyltransferase activity and gene-specific regional hypermethylation. Previous studies revealed that the methyltransferase binds with higher affinity to DNA strand breaks, gaps, abasic sites, and uracil than it does to its cognate hemimethylated CpG sites, consistent with its ancestral function as a DNA repair enzyme. These same DNA lesions are an early occurrence in models of folate and methyl deficiency and are often present in human preneoplastic cells. We hypothesized that the high-affinity binding of the maintenance DNA methyltransferase to unrepaired lesions in DNA could sequester available enzyme away from the replication fork and promote passive replication-dependent demethylation. In support of this possibility, we found that lesion-containing DNA is less efficiently methylated than lesion-free DNA from folate/methyl-deficient rats and that an increase in DNA strand breaks precedes DNA hypomethylation. Despite an adaptive increase in DNA methyltransferase activity, hemimethylated DNA from folate/methyl-deficient rats is progressively replaced by double-stranded unmethylated DNA that is resistant to remethylation with dietary methyl repletion. In promoter regions, the inappropriate binding of the DNA methyltransferase to unrepaired lesions or mispairs may promote local histone deacetylation, methylation, and regional hypermethylation associated with tumor suppressor gene silencing. These insights in an experimental model are consistent with the possibility that DNA lesions may be a necessary prerequisite for the disruption of normal DNA methylation patterns in preneoplastic and neoplastic cells.