Various cell types in higher multicellular organisms are genetically homogenous, but are functionally and morphologically heterogeneous due to the differential expression of genes during development, which appears to be controlled by epigenetic mechanisms. However, the exact molecular mechanisms that govern the tissue-specific gene expression are poorly understood. Here, we show that dynamic changes in histone modifications and DNA methylation in the upstream coding region of a gene containing the transcription initiation site determine the tissue-specific gene expression pattern. The tissue-specific expression of the transgene correlated with DNA demethylation at specific CpG sites as well as significant changes in histone modifications from a low ratio of methylated H3- lysine 4 or acetylated H3-lysine 9, 14 to acetylated H4 to higher ratios. Based on the programmed status of transgene silenced in cloned mammalian ear-derived fibroblasts, the transgene could be reprogrammed by change of histone modification and DNA methylation by inhibiting both histone deacetylase and DNA methylation, resulting in high expression of the transgene. These findings indicate that dynamic change of histone modification and DNA methylation is potentially important in the establishment and maintenance of tissue-specific gene expression.