Aberrant transcriptional inactivation of the non-X-linked human O-6-methylguanine DNA methyltransferase (MGMT) gene has been associated with loss of open chromatin structure and increases in cytosine methylation in the Sp1-binding region of the 5'-CpG island of the gene. To examine the necessity of these events for gene silencing, we have isolated and characterized a subline of human MGMT+ T98G glioma cells. The subline, T98Gs, does not express MGMT activity or MGMT mRNA, and exhibits no in vivo DNA-protein interactions at Sp1-like binding sites in the MGMT 5'-CpG island. While the MGMT CpG island is less accessible to exogenously added restriction enzymes in T98Gs nuclei than in T98G nuclei, it is similarly methylated in both T98G and T98Gs cell lines 5' and 3' to the transcription factor binding sites, and similarly unmethylated in the region encompassing the binding sites. Inappropriate transcriptional inactivation of MGMT, therefore, does not require methylation of transcription factor binding sites within the 5'-CpG island. Rather, MGMT gene silencing and transcription factor exclusion from T98Gs MGMT CpG island binding sites is most closely associated with condensed chromatin structure, which is in turn indirectly influenced by distant sites of methylation.