We have characterized Unstable factor for orange1 (Ufo1), a dominant, allele-specific modifier of expression of the maize pericarp color1 (p1) gene. The p1 gene encodes an Myb-homologous transcriptional activator of genes required for biosynthesis of red phlobaphene pigments. The P1-wr allele specifies colorless kernel pericarp and red cobs, whereas Ufo1 modifies P1-wr expression to confer pigmentation in kernel pericarp, as well as vegetative tissues, which normally do not accumulate significant amounts of phlobaphene pigments. In the presence of Ufo1, P1-wr transcript levels and transcription rate are increased in kernel pericarp. The P1-wr allele contains approximately six p1 gene copies present in a hypermethylated and multicopy tandem array. In P1-wr Ufo1 plants, methylation of P1-wr DNA sequences is reduced, whereas the methylation state of other repetitive genomic sequences was not detectably affected. The phenotypes produced by the interaction of P1-wr and Ufo1 are unstable, exhibiting somatic mosaicism and variable penetrance. Moreover, the changes in P1-wr expression and methylation are not heritable: meiotic segregants that lack Ufo1 revert to the normal P1-wr expression and methylation patterns. These results demonstrate the existence of a class of modifiers of gene expression whose effects are associated with transient changes in DNA methylation of specific loci.