Background Transposable elements are often the targets of repressive epigenetic modifications such as DNA methylation that, in theory, have the potential to spread toward nearby genes and induce epigenetic silencing. To better understand the role of DNA methylation in the relationship between transposable elements and genes, we assessed the methylation state of mouse endogenous retroviruses (ERVs) located near genes. Results We found that ERVs of the ETn/MusD family show decreased DNA methylation when near transcription start sites in tissues where the nearby gene is expressed. ERVs belonging to the IAP family, however, are generally heavily methylated, regardless of the genomic environment and the tissue studied. Furthermore, we found full-length ETn and IAP copies that display differential DNA methylation between their two long terminal repeats (LTRs), suggesting that the environment surrounding gene promoters can prevent methylation of the nearby LTR. Spreading from methylated ERV copies to nearby genes was rarely observed, with the regions between the ERVs and genes apparently acting as a boundary, enriched in H3K4me3 and CTCF, which possibly protects the unmethylated gene promoter. Furthermore, the flanking regions of unmethylated ERV copies harbor H3K4me3, consistent with spreading of euchromatin from the host gene toward ERV insertions. Conclusions We have shown that spreading of DNA methylation from ERV copies toward active gene promoters is rare. We provide evidence that genes can be protected from ERV-induced heterochromatin spreading by either blocking the invasion of repressive marks or by spreading euchromatin toward the ERV copy.