Epigenetic marks in an organism can be altered by environmental factors throughout life. Although changes in the epigenetic code can be positive, some are associated with severe diseases, in particular, cancer and neuropsychiatric disorders. Recent evidence has indicated that certain epigenetic marks can be inherited, and reshape developmental and cellular features over generations. This review examines the challenging possibility that epigenetic changes induced by environmental factors can contribute to some of the inheritance of disease and disease risk. This concept has immense implications for the understanding of biological functions and disease etiology, and provides potential novel strategies for diagnosis and treatment. Examples of epigenetic inheritance relevant to human disease, such as the detrimental effects of traumatic stress or drug/toxic exposure on brain functions, are reviewed. Different possible routes of transmission of epigenetic information involving the germline or germline-independent transfer are discussed, and different mechanisms for the maintenance and transmission of epigenetic information like chromatin remodeling and small noncoding RNAs are considered. Future research directions and remaining major challenges in this field are also outlined. Finally, the adaptive value of epigenetic inheritance, and the cost and benefit of allowing acquired epigenetic marks to persist across generations is critically evaluated.