Little is known about how changes in DNA methylation mediate risk for human diseases including dementia. Analysis of genome-wide methylation patterns in patients with two forms of tau-related dementia--progressive supranuclear palsy (PSP) and frontotemporal dementia (FTD)--revealed significant differentially methylated probes (DMPs) in patients versus unaffected controls. Remarkably, DMPs in PSP were clustered within the 17q21.31 region, previously known to harbor the major genetic risk factor for PSP. We identified and replicated a dose-dependent effect of the risk-associated H1 haplotype on methylation levels within the region in blood and brain. These data reveal that the H1 haplotype increases risk for tauopathy via differential methylation at that locus, indicating a mediating role for methylation in dementia pathophysiology.