Gene body methylation (GBM) has been hypothesized to modulate responses to environmental change, including transgenerational plasticity, but the evidence thus far has been lacking. Here we show that coral fragments reciprocally transplanted between two distant reefs respond predominantly by increase or decrease in genome-wide GBM disparity: The range of methylation levels between lowly and highly methylated genes becomes either wider or narrower. Remarkably, at a broad functional level this simple adjustment correlated very well with gene expression change, reflecting a shifting balance between expressions of environmentally responsive and housekeeping genes. In our experiment, corals in a lower-quality habitat up-regulated genes involved in environmental responses, while corals in a higher-quality habitat invested more in housekeeping genes. Transplanted fragments showing closer GBM match to local corals attained higher fitness characteristics, which supports GBM's role in acclimatization. Fixed differences in GBM between populations did not align with plastic GBM changes and were mostly observed in genes with elevated , which suggests that they arose predominantly through genetic divergence. However, we cannot completely rule out transgenerational inheritance of acquired GBM states.