CpG island hypermethylation is known to be associated with transcriptional silencing of tumor suppressor genes in neoplasia. We have previously detected aberrantly methylated sites in the first intron of the Wilms' tumor suppressor (WT1) gene in breast cancer. In the present study, we extended the investigation to a CpG island located in the promoter and first exon regions of WT1. Methylation of this CpG island was found to be extensive in MCF-7 and MDA-MB-231 breast cancer cells, as well as in 25% (five of 20 patients) of primary breast tumors. While levels of the known 3.0-kb WT1 mRNAs were decreased or not detected in these cell lines, the expression could be partially restored following treatment with a demethylation agent, 5-aza-2'-deoxycytidine. Surprisingly, a novel 2.5-kb WT1 transcript was expressed at high levels in both untreated and treated MDA-MB-231 cells. This novel transcript was likely a WT1 variant missing the first exon, and therefore escaped the methylation control present in the normal transcript. Our study implicates the future need to investigate the significance of this aberrant transcript as well as the role of WT1 CpG island hypermethylation in breast neoplasia.