DNA methylation is an essential epigenetic modification for mammalian development and is crucial for the establishment and maintenance of cellular identity. Traditionally, DNA methylation has been considered as a permanent repressive epigenetic mark. However, the application of genome-wide approaches has allowed the analysis of DNA methylation in different genomic contexts, revealing a more dynamic regulation than originally thought, as active DNA methylation and demethylation occur during cell fate commitment and terminal differentiation. Recent data provide insights into the contribution of different epigenetic factors, and DNA methylation in particular, to the establishment of cellular memory during embryonic development and the modulation of cell type-specific gene regulation programs to ensure proper differentiation. This review summarizes published data regarding DNA methylation changes along lineage specification and differentiation programs. We also discuss the current knowledge about DNA methylation alterations occurring in physiological and pathological conditions such as aging and cancer.