In the mammalian genome, 5‟-CpG-3‟ dinucleotides are frequently methylated, correlating with transcriptional silencing. Genome-wide waves of demethylation are thought to occur only twice during development, in primordial germ cells and in the pre-implantation embryo. They are followed by de novo methylation, setting up a pattern that is inherited throughout development. No global methylation changes are thought to occur during further somatic development, although methylation does alter at gene-specific loci, contributing to tissue-specific patterns of gene expression. Here we studied DNA methylation in differentiating mouse erythroblasts in vivo using several approaches including genomic-scale, reduced representation bisulfite sequencing (RRBS). Surprisingly, demethylation at the erythroid-specific β-globin locus was coincident with a wave of global DNA demethylation at most genomic elements, including repetitive elements and genes silenced in erythropoiesis. Over 30% of total methylation is irreversibly lost during erythroid differentiation. Demethylation occurred through a passive mechanism, requiring the rapid DNA replication triggered with the onset of erythroid terminal differentiation. Global loss of DNA methylation was not associated with a global increase in transcription, as determined by GeneChip analysis. We propose that global demethylation is a consequence of cellular mechanisms required for the rapid demethylation and induction of β-globin and other erythroid genes. Our findings demonstrate that, contrary to previously held dogma, DNA demethylation can occur globally during somatic cell differentiation, providing a new experimental model for the study of global demethylation in development and disease.