The mammalian DNA methylome is formed by two antagonizing processes, methylation by DNA methyltransferases (DNMT) and demethylation by ten-eleven translocation (TET) dioxygenases. Although the dynamics of either methylation or demethylation have been intensively studied in the past decade, their competition effect remains elusive. Here, we quantify the competition between DNA methylation and demethylation by the percentage of unmethylated CpGs within a partially methylated read from bisulfite sequencing. After verifying methylation competition by its strong association with the co-localization of DNMT and TET enzymes, we observe that methylation competition is strongly correlated with gene expression. In particular, during tumorigenesis, the elevation of methylation competition is associated with the repression of 40 ~ 60% of tumor suppressor genes, which cannot be explained by promoter hypermethylation alone. Furthermore, methylation competition can be used to stratify large undermethylated regions with negligible differences in average methylation into two subgroups with distinct chromatin accessibility and gene regulation patterns. Together, methylation competition represents a novel methylation metric important for transcription regulation and tumorigenesis and is largely distinct from conventional metrics, such as average methylation and methylation variation.