Epigenetic aberrations are frequent in prostate cancer and could be useful for detection and prognostication. However, the underlying mechanisms and the sequence of these changes remain to be fully elucidated. The tumor suppressor gene RARRES1 (TIG1) is frequently hypermethylated in several cancers. Having noted changes in the expression of its paralogous neighbor gene LXN at 3q25.32, we used pyrosequencing to quantify DNA methylation at both genes and determine its relationship with clinicopathological parameters in 86 prostate cancer tissues from radical prostatectomies. Methylation at LXN and RARRES1 was highly correlated. Increasing methylation was associated with worse clinical features, including biochemical recurrence, and decreased expression of both genes. However, expression of three neighboring genes was unaffected. Intriguingly, RARRES1 methylation was influenced by the genotype of the rs6441224 single-nucleotide polymorphism (SNP) in its promoter. We found that this SNP is located within an ETS-family-response element and that the more strongly methylated allele confers lower activity in reporter assays. Concomitant methylation of RARRES1 and LXN in cancerous tissues was also detected in prostate cancer cell lines and was shown to be associated with repressive histone modifications and transcriptional downregulation. In conclusion, we found that genotype-associated hypermethylation of the ETS-family target gene RARRES1 influences methylation at its neighbor gene LXN and could be useful as a prognostic biomarker.