The evolution of DNA methylation at genome level and methylation intra-tumor heterogeneity (ITH) during early lung carcinogenesis has not been systematically studied. We performed multiregional reduced representation bisulfite sequencing (RRBS) of 62 resected lung nodules from 39 patients including atypical adenomatous hyperplasia (AAH, n=14), adenocarcinoma in situ (AIS, n=15), minimally invasive adenocarcinoma (MIA, n=22), and invasive adenocarcinoma (ADC, n=11). We observed significantly higher level of methylation ITH in later-stage lesions and gradual increase in both hyper- and hypomethylation compared to matched normal lung tissues over the course of neoplastic progression. The phyloepigenetic patterns inferred from methylation aberrations resembled those based on somatic mutations suggesting parallel methylation and genetic evolution during the early lung carcinogenesis. De-convolution of transcriptomic profiles from a previously published cohort and RBBS data from the current cohort demonstrated higher ratios of T regulatory cells (Tregs) versus CD8+ T cells in later-stage diseases implying progressive immunosuppression with neoplastic progression. Furthermore, increased global hypomethylation was associated with higher mutation burden, higher copy number aberration burden, higher allelic imbalance burden as well as higher Treg/CD8 ratio highlighting the potential impact of methylation states on chromosomal instability, mutagenesis and the tumor immune microenvironment.