In the past decade, there have been exciting advances in the field of behavioral epigenetics that have provided new insights into a biological basis of neural and behavioral effects of gene-environment interactions. It is now understood that changes in the activity of genes established through epigenetic alterations occur as a consequence of exposure to environmental adversity, social stress, and traumatic experiences. DNA methylation in particular has thus emerged as a leading candidate biological pathway linking gene-environment interactions to long-term and even multigenerational trajectories in behavioral development, including the vulnerability and resilience to psychopathology. This paper discusses what we have learned from research using animal models and from studies in which the translation of these findings has been made to humans. Studies concerning the significance of DNA methylation alterations in outcomes associated with stress exposure later in life and dysfunction in the form of neuropsychiatric disorders are highlighted, and several avenues of future research are suggested that promise to advance our understanding of epigenetics both as a mechanism by which the environment can contribute to the development of psychiatric disorders and as an avenue for more effective intervention and treatment strategies.