Abstract Background The predominant model for regulation of gene expression through DNA methylation is an inverse association in which increased methylation results in decreased gene expression levels. However, recent studies suggest that the relationship between genetic variation, DNA methylation and expression is more complex. Results Systems genetic approaches for examining relationships between gene expression and methylation array data were used to find both negative and positive associations between these levels. A weighted correlation network analysis revealed that i) both transcriptome and methylome are organized in modules, ii) co-expression modules are generally not preserved in the methylation data and vice-versa, and iii) highly significant correlations exist between co-expression and co-methylation modules, suggesting the existence of factors that affect expression and methylation of different modules (i.e., trans effects at the level of modules). We observed that methylation probes associated with expression in cis were more likely to be located outside CpG islands, whereas specificity for CpG island shores was present when methylation, associated with expression, was under local genetic control. A structural equation model based analysis found strong support in particular for a traditional causal model in which gene expression is regulated by genetic variation via DNA methylation instead of gene expression affecting DNA methylation levels. Conclusions Our results provide new insights into the complex mechanisms between genetic markers, epigenetic mechanisms and gene expression. We find strong support for the classical model of genetic variants regulating methylation, which in turn regulates gene expression. Moreover we show that, although the methylation and expression modules differ, they are highly correlated.