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In plants and animals, gene expression can be altered by changes not to DNA itself but rather chemical modifications either to DNA or to histones that interact with DNA. These so called epigenetic modifications persist through cell cycle. Rapidly advancing technologies, such next generation DNA sequencing, have dramatically increased our ability to survey epigenetic markers genomewide. These techniques are revealing in great details massive epigenetic changes in cancer. Analysis of next generation sequencing data present a formidable computational challenge. We will discuss methods to address these challenges in the context of analyzing histone modifications and DNA methylation data. Several techniques useful in epigenetic data analysis will be discussed, mapping tags to reference genome incorporating all known SNPs, analysis of chIP-seq data, as well as restriction enzyme-based DNA methylation analysis.