Human tumor cell lines that do not express O6-methylguanine-DNA methyltransferase (MGMT) in detectable quantities (Mer-) are hypersensitive to the effects of O6-guanine-alkylating agents. Because the Mer- phenotype enhances tumor response to such agents, we investigated possible mechanisms involved in regulation of MGMT expression in a panel of Mer+ and Mer- pediatric rhabdomyosarcoma xenograft and cell lines. All Mer- cell and xenograft lines lacked not only MGMT activity but also the protein and mRNA as well, suggesting that its expression is transcriptionally regulated. Transfection of Mer+ and Mer- rhabdomyosarcoma cell lines with MGMT gene promoter-CAT constructs yielded similar levels of CAT expression, indicating that Mer- cells possessed the necessary factors to support transcription. Methylation in the 5'-untranslated region of the MGMT gene was assayed by Southern analysis using methylation-sensitive restriction enzymes. Digestion with HpaII and its methylation-insensitive isoschizomer, MspI, revealed little overall correlation between methylation and MGMT expression. However, methylation in a single SmaI site at position-69 was observed in all MGMT deficient lines but not in any MGMT expressing lines. These results suggest that methylation of specific cytosines in the MGMT promoter may play a role in suppressing its expression, as well as being a potentially useful marker for the Mer- phenotype.