Aberrant DNA methylation is a key feature of breast carcinoma. We aimed to test the association between breast cancer risk and epigenome-wide methylation in DNA from peripheral blood. Nested case-control study within the prospective Melbourne Collaborative Cohort Study. DNA was extracted from before-diagnosis blood samples (420 incident cases and matched controls). Methylation was measured with the Illumina Infinium Human Methylation 450 BeadChip array. Odds ratio (OR) for epigenome-wide methylation, quantified as the mean beta values across the CpGs, in relation to breast cancer risk were estimated using conditional logistic regression. Overall, the OR for breast cancer was 0.42 (95% CI 0.20-0.90) for the top versus bottom quartile of epigenome-wide DNA methylation and the OR for a one standard deviation increment was 0.69 (95% CI 0.50-0.95; test for linear trend, p = 0.02). Epigenome-wide DNA methylation of CpGs within functional promoters was associated with an increased risk, whereas epigenome-wide DNA methylation of genomic regions outside promoters was associated with decreased risk (test for heterogeneity, p = 0.0002). The increased risk associated with epigenome-wide DNA methylation in functional promoters did not vary by time between blood collection and diagnosis, whereas the inverse association with epigenome-wide DNA methylation outside functional promoters was strongest when the interval from blood collection to diagnosis was less than 5 years and weakest for the longest interval. Epigenome-wide methylation in DNA extracted from peripheral blood collected before diagnosis may have potential utility as markers of breast cancer risk and for early detection.