Global DNA hypomethylation in CD4+ cells in systemic lupus erythematosus (SLE) was suggested to play a key role in the pathogenesis. To identify new methylation-sensitive genes, we integrated genome-wide DNA methylation and mRNA profiling data in CD4+ cells of MRL/lpr (MRL) and C57BL6/J (B6) mice. We identified Cathepsin E (Ctse), in which 13 methyl-CpGs within 583 bp region of intron 1 were hypomethylated, and Ctse mRNA upregulated in MRL compared with B6 mice. One of methyl-CpGs, mCGCG was 93.3 ± 2.05% methylated in B6 mice, while 80.0 ± 6.2% methylated and mutated to CGGG in MRL mice. Kaiso is known to bind to mCGCG and we hypothesized that it represses expression of Ctse in B6 mice. The binding of Kaiso to mCGCG site in B6 mice was reduced in MRL mice revealed by ChIP-PCR. EL4 cells treated with 5-azaC and/or Trichostatin A showed the suppression of binding of Kaiso to mCGCG motif by ChIP-PCR and the overexpression of Ctse was demonstrated by qPCR. Ctse gene silencing by siRNA in EL4 cells resulted in reduction of IL-10 secretion. The hypomethylation of mCGCG motif, reduced recruitment of Kaiso, and increased expression of Ctse and Il-10 in CD4+ cells may be involved in the pathogenesis of SLE.