In silico transcriptome-wide association studies (TWAS) are commonly used to test whether expression of specific genes is linked to a complex trait. However, genotype-based in silico TWAS such as PrediXcan, exhibit low prediction accuracy for a majority of genes because genotypic data lack tissue- and disease-specificity and are not affected by the environment. Because methylation is tissue-specific and, like gene expression, can be modified by environment or disease status, methylation should predict gene expression with more accuracy than SNPs. Therefore, we propose Methyl-TWAS, the first approach that utilizes long-range methylation markers to impute gene expression for in silico TWAS through penalized regression. Methyl-TWAS 1) predicts epigenetically regulated/associated expression (eGReX), which incorporates tissue-specific expression and both genetically- (GReX) and environmentally-regulated expression to identify differentially expressed genes (DEGs) that could not be identified by genotype-based methods; and 2) incorporates both cis- and trans- CpGs, including various regulatory regions to identify DEGs that would be missed using cis- methylation only. Methyl-TWAS outperforms PrediXcan and two other methods in imputing gene expression in the nasal epithelium, particularly for immunity-related genes and DEGs in atopic asthma. Methyl-TWAS identified 3,681 (85.2%) of the 4,316 DEGs identified in a previous TWAS of atopic asthma using measured expression, while PrediXcan could not identify any gene. Methyl-TWAS also outperforms PrediXcan for expression imputation as well as in silico TWAS in white blood cells. Methyl-TWAS is a valuable tool for in silico TWAS, leveraging a growing body of publicly available genome-wide DNA methylation data for a variety of human tissues.