Reprogramming of a differentiated cell nucleus by somatic cell nuclear transplantation is an inefficient process. Following nuclear transfer, the donor nucleus often fails to express early embryonic genes and establish a normal embryonic pattern of chromatin modifications. These defects correlate with the low number of cloned embryos able to produce embryonic stem cells or develop into adult animals. Here, we show that the differentiation and methylation state of the donor cell influence the efficiency of genomic reprogramming. First, neural stem cells, when used as donors for nuclear transplantation, produce embryonic stem cells at a higher efficiency than blastocysts derived from terminally differentiated neuronal donor cells, demonstrating a correlation between the state of differentiation and cloning efficiency. Second, using a hypomorphic allele of DNA methyltransferase-1, we found that global hypomethylation of a differentiated cell genome improved cloning efficiency. Our results provide functional evidence that the differentiation and epigenetic state of the donor nucleus influences reprogramming efficiency.