Background: Wilms tumor 1 (WT1) is over-expressed in numerous cancers with respect to normal cells, and has either a tumor suppressor or oncogenic role depending on cellular context. This gene is associated with numerous alternatively spliced transcripts, which initiate from two different unique first exons within the WT1 and the alternative (A) WT1 promoter intervals. Within the hematological system, WT1 expression is restricted to CD34+/ CD38- cells and is undetectable after differentiation. Detectable expression of this gene is an excellent marker for minimal residual disease in acute myeloid leukemia (AML), but the underlying epigenetic alterations are unknown. Methods: To determine the changes in the underlying epigenetic landscape responsible for this expression, we characterized expression, DNA methylation and histone modification profiles in 28 hematological cancer cell lines and confirmed the methylation signature in 356 cytogenetically well-characterized primary hematological malignancies. Results: Despite high expression of WT1 and AWT1 transcripts in AML-derived cell lines, we observe robust hypermethylation of the AWT1 promoter and an epigenetic switch from a permissive to repressive chromatin structure between normal cells and AML cell lines. Subsequent methylation analysis in our primary leukemia and lymphoma cohort revealed that the epigenetic signature identified in cell lines is specific to myeloid-lineage malignancies, irrespective of underlying mutational status or translocation. In addition to being a highly specific marker for AML diagnosis (positive predictive value 100%; sensitivity 86.1%; negative predictive value 89.4%), we show that AWT1 hypermethylation also discriminates patients that relapse from those achieving complete remission after hematopoietic stem cell transplantation, with similar efficiency to WT1 expression profiling. Conclusions: We describe a methylation signature of the AWT1 promoter CpG island that is a promising marker for classifying myeloid-derived leukemias. In addition AWT1 hypermethylation is ideally suited to monitor the recurrence of disease during remission in patients undergoing allogeneic stem cell transfer.