An unstable allele of the Neurospora am (GDH) gene resulting from integration of the retrotransposon Tad3-2 into 5' noncoding sequences was found in previous work. We report that reversion to Am+ depends on DNA methylation within and upstream of Tad. Levels of methylation were correlated with the proportion of Am+ conidia, whether the cultures were derived from Am- or Am+ isolates. Reversion to Am+ did not occur when conidia were plated on 5-azacytidine, which reduces DNA methylation. The mutation dim-2, which appears to abolish DNA methylation, also prevented reversion to Am+. The native am allele, in a strain that lacked Tad elements, was replaced with am::Tad3-2 or with a deletion derivative that prevents transposition of Tad. Transformants of both classes showed instability comparable with that of the original isolates, which contain multiple Tad elements. Deletion of the upstream enhancer-like sequences, URSam alpha and beta, did not prevent the instability of am::Tad3-2. The results suggest that am expression is dependent on DNA methylation but not on proliferation or transposition of the Tad element and that the instability does not require the upstream sequences of am.