Cancer cells exhibit multiple epigenetic changes with prominent local DNA hypermethylation and widespread hypomethylation affecting large chromosomal domains. Epigenome studies often disregard the study of repeat elements owing to technical complexity and their undefined role in genome regulation. We have developed NSUMA (Next-generation Sequencing of UnMethylated Alu), a cost-effective approach allowing the unambiguous interrogation of DNA methylation in more than 130,000 individual Alu elements, the most abundant retrotransposon in the human genome. DNA methylation profiles of Alu repeats have been analyzed in colon cancers and normal tissues using NSUMA and whole-genome bisulfite sequencing. Normal cells show a low proportion of unmethylated Alu (1%-4%) that may increase up to 10-fold in cancer cells. In normal cells, unmethylated Alu elements tend to locate in the vicinity of functionally rich regions and display epigenetic features consistent with a direct impact on genome regulation. In cancer cells, Alu repeats are more resistant to hypomethylation than other retroelements. Genome segmentation based on high/low rates of Alu hypomethylation allows the identification of genomic compartments with differential genetic, epigenetic, and transcriptomic features. Alu hypomethylated regions show low transcriptional activity, late DNA replication, and its extent is associated with higher chromosomal instability. Our analysis demonstrates that Alu retroelements contribute to define the epigenetic landscape of normal and cancer cells and provides a unique resource on the epigenetic dynamics of a principal, but largely unexplored, component of the primate genome.