Many studies have demonstrated that epigenetic mechanisms are important in the regulation of gene expression during embryogenesis, gametogenesis, and other forms of tissue-specific gene regulation. We sought to explore the possible role of epigenetics, specifically DNA methylation, in the establishment and maintenance of cell type-restricted gene expression in the retina. To assess the relationship between DNA methylation status and expression level of retinal genes, bisulfite sequence analysis of the 1000 bp region around the transcription start sites (TSS) of representative rod and cone photoreceptor-specific genes and gene expression analysis were performed in the WERI and Y79 human retinoblastoma cell lines. Next, the homologous genes in mouse were bisulfite sequenced in the retina and in non-expressing tissues. Finally, bisulfite sequencing was performed on isolated photoreceptor and non-photoreceptor retinal cells isolated by laser capture microdissection. Differential methylation of rhodopsin (RHO), retinal binding protein 3 (RBP3, IRBP) cone opsin, short-wave-sensitive (OPN1SW), cone opsin, middle-wave-sensitive (OPN1MW), and cone opsin, long-wave-sensitive (OPN1LW) was found in the retinoblastoma cell lines that inversely correlated with gene expression levels. Similarly, we found tissue-specific hypomethylation of the promoter region of Rho and Rbp3 in mouse retina as compared to non-expressing tissues, and also observed hypomethylation of retinal-expressed microRNAs. The Rho and Rbp3 promoter regions were unmethylated in expressing photoreceptor cells and methylated in non-expressing, non-photoreceptor cells from the inner nuclear layer. A third regional hypomethylation pattern of photoreceptor-specific genes was seen in a subpopulation of non-expressing photoreceptors (Rho in cones from the Nrl -/- mouse and Opn1sw in rods). These results demonstrate that a number of photoreceptor-specific genes have cell-specific differential DNA methylation that correlates inversely with their expression level. Furthermore, these cell-specific patterns suggest that DNA methylation may play an important role in modulating photoreceptor gene expression in the developing mammalian retina.