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Background DNA methylation is thought to be extensively involved in the pathogenesis of many diseases, including major psychosis. However, most studies focus on DNA methylation alteration at promoters of protein-coding genes, despite the poor correlation between DNA methylation and gene expression. Methods We analyzed differentially methylated regions and differentially expressed genes in patients with schizophrenia and bipolar disorder and normal subjects. Gene expression and DNA methylation were analyzed with RNA-seq and MeDIP-seq of post-mortem brain tissue (brain region BA9) cohort in five schizophrenia, seven bipolar disorder cases and six controls, respectively. Results Here, we performed a large-scale integrative analysis using MeDIP-seq, coupled with RNA-seq, on brain samples from major psychotic and normal subjects and observed obvious discrepancy between DNA methylation and gene expression. We found that differentially methylated regions (DMRs) were distributed across different types of genomic elements, especially introns. These intronic DMRs were significantly enriched for diverse regulatory elements, such as enhancers and binding sites of certain transcriptional factors (e.g., Pol3). Notably, we found that parts of intronic DMRs overlapped with some intragenic miRNAs, such as hsa-mir-7-3. These intronic DMR-related miRNAs were found to target many differentially expressed genes. Moreover, functional analysis demonstrated that differential target genes of intronic DMR-related miRNAs were sufficient to capture many important biological processes in major psychosis, such as neurogenesis, suggesting that miRNAs may function as important linkers mediating the relationships between DNA methylation alteration and gene expression changes. Conclusions Collectively, our study indicated that DNA methylation alteration could induce expression changes indirectly by affecting miRNAs and the exploration of DMR-related miRNAs and their targets enhanced understanding of the molecular mechanisms underlying major psychosis. Electronic supplementary material The online version of this article (doi:10.1186/s12920-015-0139-4) contains supplementary material, which is available to authorized users.