DNA damage can affect various regulatory elements of the genome, with the consequences for DNA structure, dynamics, and interaction with proteins remaining largely unexplored. We used solution NMR spectroscopy, restrained and free molecular dynamics to obtain the structures and investigate dominant motions for a set of DNA duplexes containing CpG sites permuted with combinations of 5-methylcytosine (mC), the primary epigenetic base, and 8-oxoguanine (oxoG), an abundant DNA lesion. Guanine oxidation significantly changed the motion in both hemimethylated and fully methylated DNA, increased base pair breathing, induced BI→BII transition in the backbone 3' to the oxoG and reduced the variability of shift and tilt helical parameters. UV melting experiments corroborated the NMR and molecular dynamics results, showing significant destabilization of all methylated contexts by oxoG. Notably, some dynamic and thermodynamic effects were not additive in the fully methylated oxidized CpG, indicating that the introduced modifications interact with each other. Finally, we show that the presence of oxoG biases the recognition of methylated CpG dinucleotides by ROS1, a plant enzyme involved in epigenetic DNA demethylation, in favor of the oxidized DNA strand. Thus, the conformational and dynamic effects of spurious DNA oxidation in the regulatory CpG dinucleotide can have far-reaching biological consequences.