A hallmark of vertebrate genes is that actively transcribed genes are hypomethylated in critical regulatory sequences. However, the mechanisms that link gene transcription and DNA hypomethylation are unclear. Using a trichostatin A (TSA)-induced replication-independent demethylation assay with HEK 293 cells, we show that RNA transcription is required for DNA demethylation. Histone acetylation precedes but is not sufficient to trigger DNA demethylation. Following histone acetylation, RNA polymerase II (RNAP II) interacts with the methylated promoter. Inhibition of RNAP II transcription with actinomycin D, alpha-amanitin, or CDK7-specific small interfering RNA inhibits DNA demethylation. H3 trimethyl lysine 4 methylation, a marker of actively transcribed genes, was associated with the cytomegalovirus promoter only after demethylation. TSA-induced demethylation of the endogenous cancer testis gene GAGE follows a similar sequence of events and is dependent on RNA transcription as well. These data suggest that DNA demethylation follows rather than precedes early transcription and point towards a novel function for DNA demethylation as a memory of actively transcribed genes.