Background: Smoking has been reported to be associated with peripheral blood DNA methylation, but the causal aspects of the association have rarely been investigated. We aimed to investigate the association and underlying causation between smoking and blood methylation. Methods: The methylation profile of DNA from the peripheral blood, collected as dried blood spots stored on Guthrie cards, was measured for 479 Australian women including 66 monozygotic twin pairs, 66 dizygotic twin pairs, and 215 sisters of twins from 130 twin families using the Infinium HumanMethylation450K BeadChip array. Linear regression was used to estimate associations between methylation at ~410,000 cytosine-guanine dinucleotides (CpGs) and smoking status. A regression-based methodology for twins, Inference about Causation through Examination of Familial Confounding (ICE FALCON), was used to assess putative causation. Results: At a 5% false discovery rate, 39 CpGs located at 27 loci, including previously reported AHRR, F2RL3, 2q37.1 and 6p21.33, were found to be differentially methylated across never, former and current smokers. For all 39 CpG sites, current smokers had the lowest methylation level. Our study provides the first replication for two previously reported CpG sites, cg06226150 (SLC2A4RG) and cg21733098 (12q24.32). From the ICE FALCON analysis with smoking status as the predictor and methylation score as the outcome, a woman's methylation score was associated with her co-twin's smoking status, and the association attenuated towards the null conditioning on her own smoking status, consistent with smoking status causing changes in methylation. To the contrary, using methylation score as the predictor and smoking status as the outcome, a woman's smoking status was not associated with her co-twin's methylation score, consistent with changes in methylation not causing smoking status. Conclusions: For middle-aged women, peripheral blood DNA methylation at several genomic locations is associated with smoking. Our study suggests that smoking has a causal effect on peripheral blood DNA methylation, but not vice versa.