Endometriosis is an estrogen-dependent disease. Steroidogenic factor-1 (SF-1), a transcriptional factor essential for activation of multiple steroidogenic genes for estrogen biosynthesis, is undetectable in normal endometrial stromal cells and aberrantly expressed in endometriotic stromal cells. The objective of the study was to unravel the mechanism for differential SF-1 expression in endometrial and endometriotic stromal cells. We identified a CpG island flanking the SF-1 promoter and exon I region and determined its methylation patterns in endometrial and endometriotic cells. The study was conducted at Northwestern University. Eutopic endometrium from disease-free subjects (n = 8) and the walls of cystic endometriosis lesions of the ovaries (n = 8) were investigated. Stromal cells were isolated from these two types of tissues. Measures are mentioned in Results. SF-1 mRNA and protein levels in endometriotic stromal cells were significantly higher than those in endometrial stromal cells (P < 0.001). Bisulfite sequencing showed strikingly increased methylation in endometrial cells, compared with endometriotic cells (P < 0.001). Demethylation by 5-aza-2'-deoxycytidine increased SF-1 mRNA levels by up to 55.48-fold in endometrial cell (P < 0.05). Luciferase assays showed that the -85/+239 region bearing the CpG island regulated its activity (P < 0.01). Natural or in vitro methylation of this region strikingly reduced SF-1 promoter activity in both cell types (P < 0.01). Chromatin immunoprecipitation assay showed that methyl-CpG-binding domain protein 2 binds to the SF-1 promoter in endometrial but not endometriotic cells. This is the first demonstration of methylation-dependent regulation of SF-1 in any mammalian tissue. These findings point to a new mechanism for targeting local estrogen biosynthesis in endometriosis.