Since its discovery, methylation of DNA in mammalian cells has been correlated with transcriptional repression and with specialized chromatin structures. Recently, considerable progress has been reported in the identification of protein factors with a highly conserved DNA interaction surface, termed the methyl CpG-binding domain or MBD. A subset has been biochemically linked to histone deacetylases, suggesting a molecular mechanism for the functional properties of methylated DNA. Despite several obvious attractions, the connection between MBD proteins and histone deacetylases fails to explain all the existing data. In fact, the biochemistry and DNA-binding properties of most MBD family members have not been adequately described and considerable evidence exists for alternative mechanisms in the repression of methylated loci. Null mutations have been generated in mice for several MBD family members, the phenotypes of the mutant animals raise important questions regarding the functions of the MBD family. Here, I review the biochemistry, DNA-binding properties, and genetics of the MBD proteins that are linked to transcriptional repression, namely, MeCP2, MBD1, MBD2, and MBD3. Several models to account for the functional properties of methylated DNA are presented. BioEssays 23:1131–1137, 2001. © 2001 John Wiley & Sons, Inc.