We have inserted two expression cassettes at tagged reference chromosomal sites by using recombinase-mediated cassette exchange in mammalian cells. The three sites of integration displayed either stable or silencing position effects that were dominant over the different enhancers present in the cassettes. These position effects were strongly dependent on the orientation of the construct within the locus, with one orientation being permissive for expression and the other being nonpermissive. Orientation-specific silencing, which was observed at two of the three site tested, was associated with hypermethylation but not with changes in chromatin structure, as judged by DNase I hypersensitivity assays. Using CRE recombinase, we were able to switch in vivo the orientation of the transgenes from the permissive to the nonpermissive orientation and vice versa. Switching from the permissive to the nonpermissive orientation led to silencing, but switching from the nonpermissive to the permissive orientation did not lead to reactivation of the transgene. Instead, transgene expression occurred dynamically by transcriptional oscillations, with 10 to 20% of the cells expressing at any given time. This result suggested that the cassette had been imprinted (epigenetically tagged) while it was in the nonpermissive orientation. Methylation analysis revealed that the methylation state of the inverted cassettes resembled that of silenced cassettes except that the enhancer had selectively lost some of its methylation. Sorting of the expressing and nonexpressing cell populations provided evidence that the transcriptional oscillations of the epigenetically tagged cassette are associated with changes in the methylation status of regulatory elements in the transgene. This suggests that transgene methylation is more dynamic than was previously assumed.