Overexpression of DNA 5′-cytosine-methyltransferases (DNMT), which are enzymes that methylate the cytosine residue of CpGs, is involved in many cancers. However, the mechanism of DNMT overexpression remains unclear. Here, we showed that wild-type p53 negatively regulated DNMT1 expression by forming a complex with specificity protein 1 (Sp1) protein and chromatin modifiers on the DNMT1 promoter. However, the stoichiometry between p53 and Sp1 determined whether Sp1 acts as a transcription activator or corepressor. Low level of exogenous Sp1 enhanced the repressive activity of endogenous p53 on the DNMT1 promoter whereas high level of Sp1 upregulated DNMT1 gene expression level in A549 (p53 wild-type) cells. In H1299 (p53 null) cells, exogenous Sp1 induced DNMT1 expression in a dose-dependent manner. We also discovered a new mechanism whereby high level of Sp1, via its COOH-terminal domain, induced interaction between p53 and MDM2, resulting in degradation of p53 by MDM2-mediated ubiquitination. Clinical data from 102 lung cancer patients indicated that overexpression of DNMT1 was associated with p53 mutation (P = 0.014) and high expression of Sp1 protein (P = 0.006). In addition, patients with overexpression of both DNMT1 and Sp1 proteins showed poor prognosis (P = 0.037). Our cell and clinical data provided compelling evidence that deregulation of DNMT1 is associated with gain of transcriptional activation of Sp1 and/or loss of repression of p53. DNMT1 overexpression results in epigenetic alteration of multiple tumor suppressor genes and ultimately leads to lung tumorigenesis and poor prognosis.