Perinatal smoke/nicotine exposure alters lung development and causes asthma in exposed offspring, transmitted transgenerationally. The mechanism underlying the transgenerational inheritance of perinatal smoke/nicotine-induced asthma remains unknown, but germline epigenetic modulations may play a role. Using a well-established rat model of perinatal nicotine-induced asthma, we determined the DNA methylation pattern of spermatozoa of F1 rats exposed perinatally to nicotine in F0 gestation. To identify differentially methylated regions (DMRs), reduced representation bisulfite sequencing was performed on spermatozoa of F1 litters. The top regulated gene body and promoter DMRs were tested for lung gene expression levels, and key proteins involved in lung development and repair were determined. The overall CpG methylation in F1 sperms across gene bodies, promoters, 5'-UTRs, exons, introns, and 3'-UTRs was not affected by nicotine exposure. However, the methylation levels were different between the different genomic regions. Eighty one CpG sites, 16 gene bodies, and 3 promoter regions were differentially methylated. Gene enrichment analysis of DMRs revealed pathways involved in oxidative stress, nicotine response, alveolar and brain development, and cellular signaling. Among the DMRs, Dio1 and Nmu were the most hypermethylated and hypomethylated genes, respectively. Gene expression analysis showed that the mRNA expression and DNA methylation were incongruous. Key proteins involved in lung development and repair were significantly different (FDR < 0.05) between the nicotine and placebo-treated groups. Our data show that DNA methylation is remodeled in offspring spermatozoa upon perinatal nicotine exposure. These epigenetic alterations may play a role in transgenerational inheritance of perinatal smoke/nicotine induced asthma.