Environments experienced by both parents and offspring influence progeny traits, but the epigenetic mechanisms that regulate the balance of parental vs. progeny control of progeny phenotypes are not known. We tested whether DNA methylation in parents and/or progeny mediates responses to environmental cues experienced in both generations. Using Arabidopsis thaliana, we manipulated parental and progeny DNA methylation both chemically, via 5-azacytidine, and genetically, via mutants of methyltransferase genes, then measured progeny germination responses to simulated canopy shade in parental and progeny generations. We first found that germination of offspring responded to parental but not seed demethylation. We further found that parental demethylation reversed the parental effect of canopy in seeds with low (Cvi-1) to intermediate (Col) dormancy, but it obliterated the parental effect in seeds with high dormancy (Cvi-0). Demethylation did so by either suppressing germination of seeds matured under white-light (Cvi-1) or under canopy (Cvi-0), or by increasing the germination of seeds matured under canopy (Col). Disruption of parental methylation also prevented seeds from responding to their own light environment in one genotype (Cvi-0, most dormant), but it enabled seeds to respond to their own environment in another genotype (Cvi-1, least dormant). Using mutant genotypes, we found that both CG and non-CG DNA methylation were involved in parental effects on seed germination. Parental methylation state influences seed germination more strongly than does the progeny's own methylation state, and it influences how seeds respond to environments of parents and progeny in a genotype-specific manner.