Aberrant DNA methylation is a distinguishing feature of cancer. Yet, how methylation affects immune surveillance and tumor metastasis remains ambiguous. We introduce a novel method, Guide Positioning Sequencing (GPS), for precisely detecting whole-genome DNA methylation with cytosine coverage as high as 96% and unbiased coverage of GC-rich and repetitive regions. Systematic comparisons of GPS with whole-genome bisulfite sequencing (WGBS) found that methylation difference between gene body and promoter is an effective predictor of gene expression with a correlation coefficient of 0.67 (GPS) versus 0.33 (WGBS). Moreover, Methylation Boundary Shift (MBS) in promoters or enhancers is capable of modulating expression of genes associated with immunity and tumor metabolism. Furthermore, aberrant DNA methylation results in tissue-specific enhancer switching, which is responsible for altering cell identity during liver cancer development. Altogether, we demonstrate that GPS is a powerful tool with improved accuracy and efficiency over WGBS in simultaneously detecting genome-wide DNA methylation and genomic variation. Using GPS, we show that aberrant DNA methylation is associated with altering cell identity and immune surveillance networks, which may contribute to tumorigenesis and metastasis.