Preneoplastic and neoplastic tissues from the BALB/c inbred mouse strain were examined for acquisition of new mouse mammary tumor virus (MMTV) proviruses, tissue clonality, and methylation of proviral sequences. Previous studies have shown acquired MMTV to be hypomethylated while endogenous sequences are extensively methylated, indicative of an inverse correlation between methylation and viral expression. Examination of preneoplastic and neoplastic tissues from uninfected and infected animals revealed that while tumors were clonal, preneoplastic tissues were not. In preneoplastic tissues acquisition of new proviruses was observed; however, tumor cells represented a subset of the preneoplastic cell population. Tumors derived from highly infected preneoplastic tissue were found with or without acquired proviruses. Methylation studies revealed that demethylation of endogenous sequences occurred only in transformed tissue uninfected with milk-borne MMTV, suggesting that demethylation may be associated with carcinogenesis, also that tumors derived from highly infected preneoplastic tissue may maintain only endogenous sequences some of which were specifically demethylated. When additional proviruses were present in the tumor, demethylation of endogenous sequences was not seen In addition to changes in the level of methylation of MMTV sequences seen in transformed tissue, varying extents of methylation was observed among normal mouse tissue, varying extents of methylation was observed among normal mouse tissues. While most sites examined with MMTV proviral sequences appeared methylated in all tissues studied (lactating mammary gland, spleen, brain, lung, kidney, and liver), several sites of undermethylation were detected in lactating mammary gland and splenic DNAs. Sites of undermethylation were of two types: sites undermethylated in only a subset of cells or in one homolog, and sites undermethylated in all cells (both homologs). It was not possible to determine whether sites of partial methylation resulted from undermethylation of one homolog or was due to cell type specificity. Tissue-specific differences in methylation of MMTV loci did not reflect differences in transcriptional activity