Differentiated somatic cells and embryos cloned from somatic cells by nuclear transfer (NT) have higher levels of DNA methylation than gametes and early embryos produced in vivo. Reducing DNA methylation in donor cells before NT by treating them with chemicals such as the DNA methyl-transferase inhibitor (5-aza-2′-deoxycytidine; 5-aza-dC) may improve cloning efficiency of NT embryos by providing donor cells with similar epigenetic characteristics as in vivo embryos. Previously, high levels of this reagent were used to treat donor cells, and decreased development of cloned embryos was observed. In this study, we tested a lower range (0.005 to 0.08 μM) of this drug and used cell cycle distribution changes as an indicator of changes in the characteristics of donor cells. We found that at 0.01 μM 5-aza-dC induced changes in the cycle stage distribution of donor cells, increased the fusion rate of NT embryos, and had no deleterious effect on the percentage of blastocyst development. Levels of 5-aza-dC greater than 0.01 μM significantly decreased embryo development. Embryos cloned from donor cells treated with a low dose of 5-aza-dC had higher levels of DNA methylation than embryos produced by in vitro fertilization, but they also had higher levels of histone acetylation. Although 5-aza-dC at 0.04 μM or higher reduced DNA methylation and histone acetylation levels to those of in vitro-fertilized embryos, development to blastocyst was reduced, suggesting that this concentration of the drug was detrimental. In summary, 5-aza-dC at 0.01 μM altered donor cell characteristics while showing no deleterious effects on embryos cloned from treated cells.