Caudal-related homeobox 2 (Cdx2) has been suggested as an early marker of Barrett's esophagus (BE), which is the premalignant lesion of esophageal adenocarcinoma (EAC). However, the mechanism of ectopic Cdx2 expression in the esophageal epithelial cells and its role in the development of BE remained unclear. RT-PCR, pyrosequencing and methylation-specific PCR were used to determine expression and promoter methylation of Cdx2 in human esophageal epithelial cells (HET1A and SEG1) after treatment with 5-aza-2'-deoxycytidine (DAC), acid, bile acids and their combination. HET1A cells with stable transfection of Cdx2 were characterized for morphology and gene expression profiles with Affymetrix array. We found Cdx2 was expressed in most human EAC cell lines, but not in squamous epithelial cell lines. DAC-induced demethylation and expression of Cdx2 in HET1A and SEG1 cells, and treatment with a DNA methylating agent counteracted the effect of DAC. Treatment of HET1A and SEG1 cells with acid, bile acids or both also resulted in promoter demethylation and expression of Cdx2. HET1A cells with stable transfection of human Cdx2 formed crypt-like structures in vitro. Microarray analysis and quantitative real-time PCR showed that stable transfection of Cdx2 up-regulated differentiation markers of intestinal columnar epithelial cells and goblet cells in HET1A cells. This may be partially due to modulation of Notch signaling pathway, as western blotting confirmed down-regulation of Hes1 and up-regulation of Atoh1 and Muc2. Our data suggest that exposure to acid and/or bile acids may activate Cdx2 expression in human esophageal epithelial cells through promoter demethylation, and ectopic Cdx2 expression in esophageal squamous epithelial cells may contribute to intestinal metaplasia of the esophagus.