Despite mounting evidence that epigenetic abnormalities play a key role in cancer biology, their contributions to the malignant phenotype remain poorly understood. Here we studied genome-wide DNA methylation in normal B-cell populations and subtypes of B-cell non-Hodgkin lymphoma: follicular lymphoma and diffuse large B-cell lymphomas. These lymphomas display striking and progressive intra-tumor heterogeneity and also inter-patient heterogeneity in their cytosine methylation patterns. Epigenetic heterogeneity is initiated in normal germinal center B-cells, increases markedly with disease aggressiveness, and is associated with unfavorable clinical outcome. Moreover, patterns of abnormal methylation vary depending upon chromosomal regions, gene density and the status of neighboring genes. DNA methylation abnormalities arise via two distinct processes: i) lymphomagenic transcriptional regulators perturb promoter DNA methylation in a target gene-specific manner, and ii) aberrant epigenetic states tend to spread to neighboring promoters in the absence of CTCF insulator binding sites.