We have utilized a DNA clone complementary to epoxide hydrolase mRNA as a probe to examine the level of the mRNA in persistent hepatocyte nodules and hepatomas induced by the Solt-Farber chemical carcinogenesis procedure. Epoxide hydrolase mRNA is increased 14-fold in nodules as compared to the level in normal liver. When rats with liver nodules were administered phenobarbital, an inducer of epoxide hydrolase mRNA in normal animals, a superinduction in epoxide hydrolase mRNA was observed in the nodules (22-fold) as compared to normal liver. Suprisingly, nodule induction in conjunction with phenobarbital administration also produced marked elevation in epoxide hydrolase mRNA levels in the tissue surrounding the nodules. Using HpaII and MspI to assess the degree of methylation of CCGG sites, we have found that the epoxide hydrolase gene is hypomethylated in nodules and hepatomas compared to the gene in normal liver tissue. Phenobarbital treatment alone increased epoxide hydrolase mRNA levels but did not result in hypomethylation of the epoxide hydrolase gene. These data further support the observation that hypomethylation of specific gene sequences occurs during chemical carcinogenesis and is correlated with an elevation in the steady state level of epoxide hydrolase mRNA in persistent hepatocyte nodules.