BACKGROUND: Silencing of transgenes in mice is a common phenomenon typically associated with short multi-copy transgenes. We have investigated the regulation of the highly inducible human granulocyte-macrophage colony-stimulating-factor gene (Csf2) in transgenic mice. RESULTS: In the absence of any previous history of transcriptional activation, this transgene was expressed in T lineage cells at the correct inducible level in all lines of mice tested. In contrast, the transgene was silenced in a specific subset of lines in T cells that had encountered a previous episode of activation. Transgene silencing appeared to be both transcription-dependent and mediated by epigenetic mechanisms. Silencing was accompanied by loss of DNase I hypersensitive sites and inability to recruit RNA polymerase II upon stimulation. This pattern of silencing was reflected by increased methylation and decreased acetylation of histone H3 K9 in the transgene. We found that silenced lines were specifically associated with a single pair of tail-to-tail inverted repeated copies of the transgene embedded within a multi-copy array. CONCLUSIONS: Our study suggests that epigenetic transgene silencing can result from convergent transcription of inverted repeats which can lead to silencing of an entire multi-copy transgene array. This mechanism may account for a significant proportion of the reported cases of transgene inactivation in mice.