Analyses of molecular events associated with reprogramming somatic nuclei to pluripotency are scarce. We previously reported the reprogramming of epithelial cells by extract of undifferentiated embryonal carcinoma (EC) cells. We now demonstrate reprogramming of DNA methylation and histone modifications on regulatory regions of the developmentally regulated OCT4 and NANOG genes by exposure of 293T cells to EC cell extract. OCT4 and NANOG are transcriptionally up-regulated and undergo mosaic cytosine-phosphate-guanosine demethylation. OCT4 demethylation occurs as early as week 1, is enhanced by week 2, and is most prominent in the proximal promoter and distal enhancer. Targeted OCT4 and NANOG demethylation does not occur in 293T extract-treated cells. Retinoic acid-mediated differentiation of reprogrammed cells elicits OCT4 promoter remethylation and transcriptional repression. Chromatin immunoprecipitation analyses of lysines K4, K9, and K27 of histone H3 on OCT4 and NANOG indicate that primary chromatin remodeling determinants are acetylation of H3K9 and demethylation of dimethylated H3K9. H3K4 remains di- and trimethylated. Demethylation of trimethylated H3K9 and H3K27 also occurs; however, trimethylation seems more stable than dimethylation. We conclude that a central epigenetic reprogramming event is relaxation of chromatin at loci associated with pluripotency to create a conformation compatible with transcriptional activation.