DNA methylation may represent an important contributor to the missing heritability described in complex trait genetics. However, technology to measure DNA methylation has outpaced statistical methods for analysis. Taking advantage of the recent finding that methylated sites cluster together, we propose a Spatial Clustering Method (SCM) to detect differentially methylated regions (DMRs) in the genome in case and control studies using spatial location information. This new method compares the distribution of distances in cases and controls between DNA methylation marks in the genomic region of interest. A statistic is computed based on these distances. Proper type I error rate is maintained and statistical significance is evaluated using permutation test. The effectiveness of the SCM we propose is evaluated by a simulation study. By simulating a simple disease model, we demonstrate that SCM has good power to detect DMRs associated with the disease. Finally, we applied the SCM to an exploratory analysis of chromosome 14 from a colorectal cancer data set and identified statistically significant genomic regions. Identification of these regions should lead to a better understanding of methylated sites and their contribution to disease. The SCM can be used as a reliable statistical method for the identification of DMRs associated with disease states in exploratory epigenetic analyses.