In vertebrates, DNA methylation is an epigenetic mechanism that modulates gene transcription, and plays crucial roles during development, cell fate maintenance, germ cell pluripotency and inheritable genome imprinting. DNA methylation might also play a role as a genome defense mechanism against the mutational activity derived from transposon mobility. In contrast to the heavily methylated genomes in vertebrates, most genomes in invertebrates are poorly or just moderately methylated, and the function of DNA methylation remains unclear. Here, we review the DNA methylation system in the cephalochordate amphioxus, which belongs to the most basally divergent group of our own phylum, the chordates. First, surveys of the amphioxus genome database reveal the presence of the DNA methylation machinery, DNA methyltransferases and methyl-CpG-binding domain proteins. Second, comparative genomics and analyses of conserved synteny between amphioxus and vertebrates provide robust evidence that the DNA methylation machinery of amphioxus represents the ancestral toolkit of chordates, and that its expansion in vertebrates was originated by the two rounds of whole-genome duplication that occurred in stem vertebrates. Third, in silico analysis of CpGo/e ratios throughout the amphioxus genome suggests a bimodal distribution of DNA methylation, consistent with a mosaic pattern comprising domains of methylated DNA interspersed with domains of unmethylated DNA, similar to the situation described in ascidians, but radically different to the globally methylated vertebrate genomes. Finally, we discuss potential roles of the DNA methylation system in amphioxus in the context of chordate genome evolution and the origin of vertebrates.