In mammals, cytosine methylation (5mC) is widely distributed throughout the genome but is notably depleted from active promoters and enhancers. While the role of DNA methylation in promoter silencing has been well documented, the function of this epigenetic mark at enhancers remains unclear. Recent experiments have demonstrated that enhancers are enriched for 5-hydroxymethylcytosine (5hmC), an oxidization product of the Tet family of 5mC dioxygenases and an intermediate of DNA demethylation. These results support the involvement of Tet proteins in the regulation of dynamic DNA methylation at enhancers. By mapping DNA methylation and hydroxymethylation at base resolution, we find that deletion of Tet2 causes extensive loss of 5hmC at enhancers, accompanied by enhancer hypermethylation, reduction of enhancer activity, and delayed gene induction in the early steps of differentiation. Our results reveal that DNA demethylation modulates enhancer activity, and its disruption influences the timing of transcriptome reprogramming during cellular differentiation.