Promoter DNA methylation is a well-established mechanism of transcription repression, though its global correlation with gene expression is weak. This weak correlation can be attributed to the failure of current methylation quantification methods to consider the heterogeneity among sequenced bulk cells. Here, we introduce Cell Heterogeneity-Adjusted cLonal Methylation (CHALM) as a methylation quantification method. CHALM improves understanding of the functional consequences of DNA methylation, including its correlations with gene expression and H3K4me3. When applied to different methylation datasets, the CHALM method enables detection of differentially methylated genes that exhibit distinct biological functions supporting underlying mechanisms.