The roles of eukaryotic DNA methylation in the repression of mRNA transcription and in the formation of heterochromatin have been extensively elucidated over the past several years. However, the role of DNA methylation in transcriptional activation remains a mystery. In particular, it is not known whether the transcriptional activation of methylated DNA is promoter-specific, depends directly on sequence specific DNA binding proteins, or is facilitated by the methylation. Here we report that the sequence specific DNA binding protein, RFX, previously shown to mediate the transition from an inactive to an active chromatin structure, activates a methylated promoter. RFX is capable of mediating enhanceosome formation on a methylated promoter, thereby mediating a transition from a methylation-dependent repression of the promoter to a methylation-dependent activation of the promoter. These results indicate novel roles for DNA methylation and sequence specific DNA binding proteins in transcriptional activation.