A role for DNA demethylation in transcriptional regulation of genes expressed in differentiated somatic cells remains controversial. Here, we define a small region in the promoter-enhancer of the interleukin-2 (Il2) gene that demethylates in T lymphocytes following activation, and remains demethylated thereafter. This epigenetic change was necessary and sufficient to enhance transcription in reporter plasmids. The demethylation process started as early as 20 minutes after stimulation and was not prevented by a G1 to S phase cell cycle inhibitor that blocks DNA replication. These results imply that this demethylation process proceeds by an active enzymatic mechanism.