DNA methylation plays a key role in demarcation of regulatory regions, including promoter-associated CpG islands. While CpG islands are typically maintained in an unmethylated state, a proportion of islands are subject to hypermethylation in cancer cells. A widely studied, but still unresolved question to date, is to understand what triggers the aberrant changes to the DNA methylation landscape in cancer. Using methylome sequencing we have identified subset of distinct CpG islands that display partial DNA methylation encroachment across 5’ or 3’ CpG island borders. CpG island methylation encroachment is a widespread phenomenon in clinical prostate and breast cancer and is commonly associated with gene suppression. By integrating whole-genome bisulphite sequencing and ChiP-seq data, we have revealed that the pattern of H3K4 monomethylated nucleosomes at CpG island borders in normal cells is associated with the different modes of CpG island hypermethylation. Notably, we show that genetic manipulation of KMT2D results in concordant alterations in H3K4me1 levels and corresponding CpG island border DNA methylation encroachment. Prostate cancer DNA harbouring KMT2D mutations also display reduced erosion of CpG island border methylation. H3K4me1 was mainly considered as a mark of enhancers, but our findings establish a unique role for H3K4me1 in the demarcation of CpG island borders in normal cells, which become eroded in cancer.