We characterize the changes in chromatin structure, DNA methylation and transcription during and after homologous DNA repair (HR). We find that HR modifies the DNA methylation pattern of the repaired segment. HR also alters local histone H3 methylation as well chromatin structure by inducing DNA-chromatin loops connecting the 5' and 3' ends of the repaired gene. During a two-week period after repair, transcription-associated demethylation promoted by Base Excision Repair enzymes further modifies methylation of the repaired DNA. Subsequently, the repaired genes display stable but diverse methylation profiles. These profiles govern the levels of expression in each clone. Our data argue that DNA methylation and chromatin remodelling induced by HR may be a source of permanent variation of gene expression in somatic cells.