Obesity and type 2 diabetes have a heritable component that is not attributable to genetic factors. Instead, epigenetic mechanisms may play a role. We have developed a mouse model of intrauterine growth restriction (IUGR) by in utero malnutrition. IUGR mice developed obesity and glucose intolerance with aging. Strikingly, offspring of IUGR male mice also developed glucose intolerance. Here, we show that in utero malnutrition of F1 males influenced the expression of lipogenic genes in livers of F2 mice, partly due to altered expression of Lxra. In turn, Lxra expression is attributed to altered DNA methylation of its 5' UTR region. We found the same epigenetic signature in the sperm of their progenitors, F1 males. Our data indicate that in utero malnutrition results in epigenetic modifications in germ cells (F1) that are subsequently transmitted and maintained in somatic cells of the F2, thereby influencing health and disease risk of the offspring.