Epigenetics is the study of all mechanisms that regulate gene transcription and genome stability that are maintained throughout the cell division, but do not include the DNA sequence itself. The best-studied epigenetic mechanism to date is DNA methylation, where methyl groups are added to the cytosine base within cytosine-guanine dinucleotides (CpG sites). CpGs are frequently clustered in high density (CpG islands (CGIs)) at the promoter of over half of all genes. Current knowledge of transcriptional regulation by DNA methylation centres on its role at the promoter where unmethylated CGIs are present at most actively transcribed genes, whereas hypermethylation of the promoter results in gene repression. Over the last 5 years, research has gradually incorporated a broader understanding that methylation patterns across the gene (so-called intragenic or gene body methylation) may have a role in transcriptional regulation and efficiency. Numerous genome-wide DNA methylation profiling studies now support this notion, although whether DNA methylation patterns are a cause or consequence of other regulatory mechanisms is not yet clear. This review will examine the evidence for the function of intragenic methylation in gene transcription, and discuss the significance of this in carcinogenesis and for the future use of therapies targeted against DNA methylation.