In utero smoke exposure has been shown to have detrimental effects on lung function and to be associated with persistent wheezing and asthma in children. One potential mechanism of IUS effects could be alterations in DNA methylation, which may have life-long implications. The goal of this study was to examine the association between DNA methylation and nicotine exposure in fetal lung and placental tissue in early development; nicotine exposure in this analysis represents a likely surrogate for in-utero smoke. We performed an epigenome-wide analysis of DNA methylation in fetal lung tissue (n = 85, 41 smoke exposed (48%), 44 controls) and the corresponding placental tissue samples (n = 80, 39 smoke exposed (49%), 41 controls) using the Illumina HumanMethylation450 BeadChip array. Differential methylation analyses were conducted to evaluate the variation associated with nicotine exposure. The most significant CpG sites in the fetal lung analysis mapped to the PKP3 (P = 2.94×10(-03)), ANKRD33B (P = 3.12×10(-03)), CNTD2 (P = 4.9×10(-03)) and DPP10 (P = 5.43×10(-03)) genes. In the placental methylome, the most significant CpG sites mapped to the GTF2H2C and GTF2H2D genes (P = 2.87×10(-06) - 3.48×10(-05)). One hundred and one unique CpG sites with P-values < 0.05 were concordant between lung and placental tissue analyses. Gene Set Enrichment Analysis demonstrated enrichment of specific disorders, such as asthma and immune disorders. Our findings demonstrate an association between in utero nicotine exposure and variable DNA methylation in fetal lung and placental tissues, suggesting a role for DNA methylation variation in the fetal origins of chronic diseases.