(PLEASE KEEP IN WORD, DO NOT PDF) Misregulation of hematopoietic genes can result in disruption of the production of functionally specialized blood cells. Abnormal DNA methylation, a key epigenetic signature essential in hematopoiesis, is regarded as the hallmark of most hematological malignancies, including myelodysplastic syndromes (MDS). Unfortunately, the currently approved demethylating agents act indiscriminately on the entire genome and come with a toll of high toxicity and low specificity. Strategies to achieve selective demethylation are therefore needed. The long-term goal of our research is to understand how to develop a highly specific and low toxic approach to correct aberrant DNA methylation in disease states. The central hypothesis is that the establishment of DNA methylation in hematopoiesis is controlled by specialized RNAs, able to bind to the DNA methyltransferase 1 (DNMT1) – DNMT1- interacting RNAs (DiRs). DiRs are widespread and prevent DNA methylation and silencing in a locus-specific manner. Specifically, we have shown that the expression of a master regulator of hematopoietic differentiation, CCAAT/enhancer-binding protein alpha (CEBPA), is regulated by a DiR originated upstream of the CEBPA gene during the S phase, termed extra-coding (ec)CEBPA. The overall objectives of this proposal are to investigate how ecCEBPA and lineage specific DiRs guide hematopoietic differentiation. The rationale for this project is to demonstrate DiR-mediated regulation of DNA methylation in hematopoiesis. The central hypothesis will be tested by pursuing two specific aims: 1) Define the biological role of ecCEBPA in hematopoietic differentiation; and 2) Define the biological role of DNMT1-interacting RNAs in hematopoietic differentiation. The proposed research is innovative because we will dissect the regulation of DNA methylation in hematopoietic differentiation and uncover the mechanisms underlying the control of cell type-specific methylation patterns. It is significant because we will identify key epigenetic regulators governing the establishment of DNA methylation in hematopoiesis; and lay the foundation for a transformative approach to achieve gene-specific control of this critical epigenetic mark.