In vertebrates, transcriptionally active promoters are undermethylated. Since the transcription factor Sp1, and more recently NF-kappaB, have been implicated in the demethylation process, we examined the effect of transcription factors on demethylation by injecting in vitro methylated plasmid DNA into Xenopus fertilized eggs. We found that various transactivation domains, including a strong acidic activation domain from the viral protein VP16, can enhance demethylation of a promoter region when fused to a DNA binding domain which recognizes the promoter. Furthermore, demethylation occurs only after the midblastula transition, when the general transcription machinery of the host embryo becomes available. Nevertheless, transcription factor binding need not be followed by actual transcription, since demethylation is not blocked by alpha-amanitin treatment. Finally, replication of the target DNA is a prerequisite for efficient demethylation since only plasmids that carry the bovine papilloma virus sequences which support plasmid replication after the midblastula transition are demethylated. No demethylation is detectable in the oocyte system where DNA is not replicated. These results suggest that, in the Xenopus embryo, promoters for which transcription factors are available are demethylated by a replication-dependent, possibly passive mechanism.