TET1 is a 2-oxoglutarate (2OG)- and Fe(II)-dependent enzyme that converts 5-methylcytosine (5mC) to 5-hydroxymethylcytosine (hmC) in mammalian cells. This conversion is crucial for epigenetic regulation. TET1, a fusion partner of the MLL gene in acute myeloid leukemia, was identified through computational analysis of enzymes that modify 5mC. TET1 is present in the genome of mouse embryonic stem cells (ES cells) and its levels decrease upon RNA interference-mediated depletion. TET proteins, including TET1, TET2, and TET3, are homologs of trypanosome proteins JBP1 and JBP2, which are involved in the oxidation of thymine's methyl group. TET proteins are predicted to catalyze the first step of J biosynthesis, which involves sequential hydroxylation and glucosylation of the methyl group of thymine. TET1 was shown to convert 5mC to hmC in cultured cells and in vitro. The conversion of 5mC to hmC was confirmed using high-resolution mass spectrometry, which identified the modified nucleotide as hmC. TET1 was also shown to catalyze the conversion of 5mC to hmC in fully methylated and hemimethylated DNA oligonucleotides. The presence of hmC in ES cells was confirmed, and its abundance decreased upon differentiation or Tet1 depletion. TET1 mRNA levels declined by 80% in response to leukemia inhibitory factor (LIF) withdrawal, and hmC levels decreased by 40% in differentiated ES cells. RNA interference-mediated depletion of endogenous Tet1 resulted in an 87% decrease in Tet1 mRNA levels and a parallel 40% decrease in hmC levels. TET proteins may play a role in epigenetic regulation by modifying 5mC to hmC. hmC may influence chromatin structure and local transcriptional activity by recruiting selective hmC-binding proteins or excluding methyl-CpG-binding proteins (MBPs) that normally recognize 5mC. Alternatively, conversion of 5mC to hmC may facilitate passive DNA demethylation by excluding the maintenance DNA methyltransferase DNMT1, which recognizes hmC poorly. hmC may also be an intermediate in a pathway of active DNA demethylation. These findings suggest that TET proteins, including TET1, are responsible for hmC generation in ES cells under physiological conditions. The presence of hmC in ES cells indicates that it is a physiological constituent of mammalian DNA. The study also highlights the potential role of TET proteins in oncogenic transformation and malignant progression.TET1 is a 2-oxoglutarate (2OG)- and Fe(II)-dependent enzyme that converts 5-methylcytosine (5mC) to 5-hydroxymethylcytosine (hmC) in mammalian cells. This conversion is crucial for epigenetic regulation. TET1, a fusion partner of the MLL gene in acute myeloid leukemia, was identified through computational analysis of enzymes that modify 5mC. TET1 is present in the genome of mouse embryonic stem cells (ES cells) and its levels decrease upon RNA interference-mediated depletion. TET proteins, including TET1, TET2, and TET3, are homologs of trypanosome proteins JBP1 and JBP2, which are involved in the oxidation of thymine's methyl group. TET proteins are predicted to catalyze the first step of J biosynthesis, which involves sequential hydroxylation and glucosylation of the methyl group of thymine. TET1 was shown to convert 5mC to hmC in cultured cells and in vitro. The conversion of 5mC to hmC was confirmed using high-resolution mass spectrometry, which identified the modified nucleotide as hmC. TET1 was also shown to catalyze the conversion of 5mC to hmC in fully methylated and hemimethylated DNA oligonucleotides. The presence of hmC in ES cells was confirmed, and its abundance decreased upon differentiation or Tet1 depletion. TET1 mRNA levels declined by 80% in response to leukemia inhibitory factor (LIF) withdrawal, and hmC levels decreased by 40% in differentiated ES cells. RNA interference-mediated depletion of endogenous Tet1 resulted in an 87% decrease in Tet1 mRNA levels and a parallel 40% decrease in hmC levels. TET proteins may play a role in epigenetic regulation by modifying 5mC to hmC. hmC may influence chromatin structure and local transcriptional activity by recruiting selective hmC-binding proteins or excluding methyl-CpG-binding proteins (MBPs) that normally recognize 5mC. Alternatively, conversion of 5mC to hmC may facilitate passive DNA demethylation by excluding the maintenance DNA methyltransferase DNMT1, which recognizes hmC poorly. hmC may also be an intermediate in a pathway of active DNA demethylation. These findings suggest that TET proteins, including TET1, are responsible for hmC generation in ES cells under physiological conditions. The presence of hmC in ES cells indicates that it is a physiological constituent of mammalian DNA. The study also highlights the potential role of TET proteins in oncogenic transformation and malignant progression.