Canine cloning is occasionally accompanied by abnormal sexual development. Some male donor cells produce cloned pups with female external genitalia and complete male gonadal dysgenesis, which is classified as an XY disorder of sex development (XY DSD). In this study, we examine the potential of 5-aza-2'-deoxycytidine (5-aza-dC), a DNA methyltransferase inhibitor, to reduce the phenotypic abnormality XY DSD in somatic cell nuclear transfer (SCNT)- derived pups. We used a 9-year-old normal male German Shepherd dog as a cell donor. Donor cells were treated with 10 nM 5-aza-dC for 4 days before being used for SCNT. At the same stage of cell development, significantly lower levels of DNA methylation of the sex-determining region Y (SRY) promoter was observed in the treated donor cells compared to that in the untreated cells (95.2% versus 53.3% on day 4 for the control and treated groups, respectively). No significant differences were observed in the control or treatment groups concerning fusion rate, pregnancy rate (30 days or entire period), the number of pups, or the incidence of XY DSD. However, more XY DSD dogs were observed in the control group (31.25%) than in the treatment group (14.29%). Hypermethylation of the SRY promoter was observed in the XY DSD cloned pups in both the treatment (84.8%) and control groups (91.1 ± 1.4%) compared to the methylation level in the phenotypically normal male pups of the treatment (23.2 ± 20.9%) and control groups (39.1 ± 20.1%). These results suggest that 5-aza-dC treatment of donor cells can reduce the methylation level of the SRY promoter in donor cells, and thus, 5-aza-dC is advantageous for reducing the incidence of XY DSD in canine cloning.