DNA methylation affects expression of associated genes and may contribute to the missing genetic effects from genome-wide association studies of osteoporosis. To improve insight into the mechanisms of postmenopausal osteoporosis, we combined transcript profiling with DNA methylation analyses in bone. RNA and DNA were isolated from 84 bone biopsies of postmenopausal donors varying markedly in bone mineral density (BMD). In all, 2529 CpGs in the top 100 genes most significantly associated with BMD were analyzed. The methylation levels at 63 CpGs differed significantly between healthy and osteoporotic women at 10% false discovery rate (FDR). Five of these CpGs at 5% FDR could explain 14% of BMD variation. To test whether blood DNA methylation reflect the situation in bone (as shown for other tissues), an independent cohort was selected and BMD association was demonstrated in blood for 13 of the 63 CpGs. Four transcripts representing inhibitors of bone metabolism-MEPE, SOST, WIF1, and DKK1-showed correlation to a high number of methylated CpGs, at 5% FDR. Our results link DNA methylation to the genetic influence modifying the skeleton, and the data suggest a complex interaction between CpG methylation and gene regulation. This is the first study in the hitherto largest number of postmenopausal women to demonstrate a strong association among bone CpG methylation, transcript levels, and BMD/fracture. This new insight may have implications for evaluation of osteoporosis stage and susceptibility.