Differential intragenic methylation in social insects has been hailed as a prime mover of environmentally driven organismal plasticity and even as evidence for genomic imprinting. However, very little experimental work has been done to test these ideas and to prove the validity of such claims. Here we analyze in detail differentially methylated obligatory epialleles of a conserved gene encoding lysosomal α-mannosidase (AmLAM) in the honeybee. We combined genotyping of progenies derived from colonies founded by single drone inseminated queens, ultra-deep allele-specific bisulfite DNA sequencing, and gene expression to reveal how sequence variants, DNA methylation, and transcription interrelate. We show that both methylated and non-methylated states of AmLAM follow Mendelian inheritance patterns and are strongly influenced by polymorphic changes in DNA. Increased methylation of a given allele correlates with higher levels of context-dependent AmLAM expression and appears to affect the transcription of an antisense long noncoding RNA. No evidence of allelic imbalance or imprinting involved in this process has been found. Our data suggest that by generating alternate methylation states that affect gene expression, sequence variants provide organisms with a high level of epigenetic flexibility that can be used to select appropriate responses in various contexts. This study represents the first effort to integrate DNA sequence variants, gene expression, and methylation in a social insect to advance our understanding of their relationships in the context of causality.