Hyperhydricity often occurs in plant tissue culture, seriously influencing the commercial micropropagation and genetic improvement. DNA methylation has been studied for its function in plant development and stress responses. However, its potential role in hyperhydricity is unknown. In this study, we report the first comparative DNA methylome analysis of normal and hyperhydric Arabidopsis seedlings using whole-genome bisulfite sequencing. We found that the global methylation level decreased in hyperhydric seedlings, and most of the differentially methylated genes were CHH hypomethylated genes. Moreover, the bisulfite sequencing results showed that hyperhydric seedlings displayed CHH demethylation patterns in the promoter of the ACS1 and ETR1 genes, resulting in up-regulated expression of both genes and increased ethylene accumulation. Furthermore, hyperhydric seedling displayed reduced stomatal aperture accompanied by decreased water loss and increased phosphorylation of aquaporins accompanied by increased water uptake. While AgNO3 prevented hyperhydricity by maintained the degree of methylation in the promoter regions of ACS1 and ETR1 and down-regulated the transcription of both genes. AgNO3 also reduced the content of ethylene together with the phosphorylation of aquaporins and water uptake. Taken together, this study suggested that DNA demethylation is a key switch that activates ethylene pathway genes to enable ethylene synthesis and signal transduction, which may subsequently influence aquaporin phosphorylation and stomatal aperture, eventually cause hyperhydricity; thus, DNA demethylation plays a crucial role in hyperhydricity. These results provide insights into the epigenetic regulation mechanism of hyperhydricity, and confirm the role of ethylene and AgNO3 in hyperhydricity control.