Development in mammals is accompanied by specific de novo and demethylation events that are thought to stabilize differentiated cell phenotypes. We demonstrate that a large percentage of the tissue-specific methylation pattern is generated postnatally. Demethylation in the liver is observed in thousands of enhancer-like sequences associated with genes that undergo activation during the first few weeks of life. Using. conditional gene ablation strategy we show that the removal of these methyl groups is stable and necessary for assuring proper hepatocyte gene expression and function through its effect on chromatin accessibility. These postnatal changes in methylation come about through exposure to hormone signaling. These results define the molecular rules of 5-methyl-cytosine regulation as an epigenetic mechanism underlying cellular responses to. changing environment.