Epigenetic gene regulation is of central importance for development and disease. Despite dramatic progress in epigenetics during the past decade, DNA demethylation remains one of the last big frontiers and very little is known about it. DNA demethylation is a widespread phenomenon and occurs in plants as well as in animals, during development, in the adult, and during somatic cell reprogramming of pluripotency genes. The molecular identity of the DNA demethylase in animal cells remained unresolved and has hampered progress in the field for decades. In 2007 we published that Growth Arrest and DNA Damage 45 a (Gadd45a) is a key player in active DNA demethylation, which opened new avenues in the study of this elusive process. The goal of this project is to further analyze the mechanism of DNA demethylation as well as the role played by Gadd45 in development. Given the many unresolved questions in this burgeoning field, our work promises to be ground-breaking and therefore have a profound impact in unraveling one of the least understood processes of gene regulation. Specifically we will address the following points. I) The biological role of Gadd45 mediated DNA demethylation in mouse embryos and adults is unknown. We have obtained mouse mutants for Gadd45a,b, and g and we will analyze them for developmental defects and dissect the methylation regulation of relevant genes. II) The targeting mechanism by which Gadd45 is binding to and demethylating specific sites in the genome is a central unresolved issue. We have identified a candidate DNA binding protein interacting with Gadd45 and we will analyze its role in site specific targeting of DNA demethylation in vitro and in mouse. III) We found that Gadd45 is an RNA binding protein and we will therefore analyze how non-coding RNAs are involved in targeting and/or activating Gadd45 during DNA demethylation.