Gemcitabine is a cytotoxic cytidine analog, which is widely used in anti-cancer therapy. One mechanism by which gemcitabine acts is by inhibiting nucleotide excision repair (NER). Recently NER was implicated in Gadd45 mediated DNA demethylation and epigenetic gene activation. Here we analyzed the effect of gemcitabine on DNA demethylation. We find that gemcitabine inhibits specifically Gadd45a mediated reporter gene activation and DNA demethylation, similar to the topoisomerase I inhibitor camptothecin, which also inhibits NER. In contrast, base excision repair inhibitors had no effect on DNA demethylation. In Xenopus oocytes, gemcitabine inhibits DNA repair synthesis accompanying demethylation of oct4. In mammalian cells, gemcitabine induces DNA hypermethylation and silencing of MLH1. The results indicate that gemcitabine induces epigenetic gene silencing by inhibiting repair mediated DNA demethylation. Thus, gemcitabine can function epigenetically and provides a tool to manipulate DNA methylation.