Cytosine methylation (5mC) is vital for cellular function, and yet 5mC sites are also commonly mutated in the genome. In this study, we analyse the genomes of over 900 cancer samples, together with tissue type-specific methylation and replication timing data. We describe a strong mutation-methylation association in colorectal cancers with microsatellite instability (MSI) or with Polymerase epsilon (POLE) exonuclease domain mutation. We describe a potential role for mismatch repair in the correction of mismatches resulting from deamination of 5mC, and propose a mutator phenotype to exist in POLE-mutant cancers specifically at 5mC sites. We also associate POLE-mutant hotspot coding mutations in APC and TP53 with CpG methylation. Analysing mutations across additional cancer types, we identify nucleotide excision repair- and AID/APOBEC-induced processes to underlie differential mutation-methylation associations in certain cancer subtypes. This study reveals differential associations vital for accurately mapping regional variation in mutation density and pinpointing driver mutations in cancer.