In contrast to heavily methylated mammalian genomes, invertebrate genomes are only sparsely methylated in a 'mosaic' fashion with the majority of methylated CpG dinucleotides found across gene bodies. Importantly, this gene body methylation is frequently associated with active transcription, and studies in the honeybee have shown that there are strong links between gene body methylation and alternative splicing. Additional work also highlights that obligatory methylated epialleles influence transcriptional changes in a context-specific manner. Here we discuss the current knowledge in this emerging field and highlight both similarities and differences between DNA methylation systems in mammals and invertebrates. Finally, we argue that the relationship between genetic variation, differential DNA methylation, other epigenetic modifications and the transcriptome must be further explored to fully understand the role of DNA methylation in converting genomic sequences into phenotypes.