Tissue specific patterns of methylated cytosine residues vary with age, can be altered by environmental factors, and are often abnormal in human disease yet the cellular consequences of DNA methylation are incompletely understood. Although the bodies of highly expressed genes are often extensively methylated in plants, the relationship between intragenic methylation and expression is less clear in mammalian cells. We performed genome-wide analyses of DNA methylation and gene expression to determine how the pattern of intragenic methylation correlates with transcription and to assess the relationship between methylation of exonic and intronic portions of the gene body. We found that dense exonic methylation is far more common than previously recognized or expected statistically, yet first exons are relatively spared compared to more downstream exons and introns. Dense methylation surrounding the transcription start site (TSS) is uncoupled from methylation within more downstream regions suggesting that there are at least two classes of intragenic methylation. Whereas methylation surrounding the TSS is tightly linked to transcriptional silencing, methylation of more downstream regions is unassociated with the magnitude of gene expression. Notably, we found that DNA methylation downstream of the TSS, in the region of the first exon, is much more tightly linked to transcriptional silencing than is methylation in the upstream promoter region. These data provide direct evidence that DNA methylation is interpreted dissimilarly in different regions of the gene body and suggest that first exon methylation blocks transcript initiation, or vice versa. Our data also show that once initiated, downstream methylation is not a significant impediment to polymerase extension. Thus, the consequences of most intragenic DNA methylation must extend beyond the modulation of transcription magnitude.Sequencing data and gene expression microarray data have been submitted to the GEO online database (accession number SRA012081.1). Supporting information including expanded methods and ten additional figures in support of the manuscript is provided.