Aberrant DNA methylation is a common feature of neoplastic lesions, and early detection of such changes may provide powerful mechanistic insights and biomarkers for carcinogenesis. Here, we investigate dynamic changes in the mouse liver DNA methylome associated with short (1 day) and prolonged (7, 28 and 91 days) exposure to the rodent liver non-genotoxic carcinogen, phenobarbital (PB). We find that the distribution of 5mC/5hmC is highly consistent between untreated individuals of a similar age; yet, changes during liver maturation in a transcriptionally dependent manner. Following drug treatment, we identify and validate a series of differentially methylated or hydroxymethylated regions: exposure results in staged transcriptional responses with distinct kinetic profiles that strongly correlate with promoter proximal region 5hmC levels. Furthermore, reciprocal changes for both 5mC and 5hmC in response to PB suggest that active demethylation may be taking place at each set of these loci via a 5hmC intermediate. Finally, we identify potential early biomarkers for non-genotoxic carcinogenesis, including several genes aberrantly expressed in liver cancer. Our work suggests that 5hmC profiling can be used as an indicator of cell states during organ maturation and drug-induced responses and provides novel epigenetic signatures for non-genotoxic carcinogen exposure.