Most transposable element (TE) sequences present in plant and mammalian genomes are targeted by epigenetic mechanisms, including DNA methylation. In plants, this chromatin modification is not extensively reset at every generation, opening up the possibility of TE-associated transgenerational epigenetic inheritance (TEI). However, the determinants, prevalence, and phenotypic consequences of TEI in nature remain unclear. Based on comprehensive analyses of DNA methylation at TE sequences in epigenetic recombinant inbred lines as well as in hundreds of strains of Arabidopsis thaliana, we identified natural epivariants with severe hypomethylation at ~1000 TE sequences. Two main antagonistic genomic forces shape natural epivariation: trans RNA-directed DNA methylation and nearby Pol-II activity, which limits and facilitates the possibility of TEI at a given TE sequence, respectively. Crucially, most natural TE epivariants are truly epiallelic and located near stress-responsive genes, where they may be targets of selection because of their enhancing effect on gene induction. These findings establish the ecological significance and limits of TEI in plants.