Variable levels of DNA methylation have been reported at tissue-specific differential methylation regions (DMRs) overlapping enhancers, including super-enhancers (SEs) associated with key cell identity genes, but the mechanisms responsible for this intriguing behavior are not well understood. We used allele-specific reporters at the endogenous Sox2 and Mir290 SEs in embryonic stem cells and found that the allelic DNA methylation state is dynamically switching, resulting in cell-to-cell heterogeneity. Dynamic DNA methylation is driven by the balance between DNA methyltransferases and transcription factor binding on one side and co-regulated with the Mediator complex recruitment and H3K27ac level changes at regulatory elements on the other side. DNA methylation at the Sox2 and the Mir290 SEs is independently regulated and has distinct consequences on the cellular differentiation state. Dynamic allele-specific DNA methylation at the two SEs was also seen at different stages in preimplantation embryos, revealing that methylation heterogeneity occurs in vivo. Display omitted •Allele-specific reporters revealed dynamic DNA methylation of Sox2 and miR290 SEs•DNMTs and transcription factor binding regulate methylation dynamics•SE DNA methylation directly regulates transcription in cis•Dynamic DNA methylation is co-regulated with MED1 recruitment and H3K27ac level Song et al. used an allelic reporter approach to show super-enhancers allelic DNA methylation dynamics underlies locus-specific heterogeneity, which functionally impacts transcription and cellular states of mouse embryonic stem cells.