Global DNA demethylation is an integral part of reprogramming processes in vivo and in vitro, but whether it occurs in the derivation of induced pluripotent stem cells (iPSCs) is not known. Here, we show that iPSC reprogramming involves both global and targeted demethylation, which are separable mechanistically and by their biological outcomes. Cells at intermediate-late stages of reprogramming undergo transient genome-wide demethylation, which is more pronounced in female cells. Global demethylation requires activation-induced cytidine deaminase (AID)-mediated downregulation of UHRF1 protein, and abolishing demethylation leaves thousands of hypermethylated regions in the iPSC genome. Independently of AID and global demethylation, regulatory regions, particularly ESC enhancers and super-enhancers, are specifically targeted for hypomethylation in association with transcription of the pluripotency network. Our results show that global and targeted DNA demethylation are conserved and distinct reprogramming processes, presumably because of their respective roles in epigenetic memory erasure and in the establishment of cell identity.