Mammalian DNA is methylated at many CpG dinucleotides. The biological consequences of methylation are mediated by a family of methyl-CpG binding proteins 1, 2, 3, 4. The best characterized family member is MeCP2, a transcriptional repressor that recruits histone deacetylases 5, 6, 7. Our report concerns MBD2, which can bind methylated DNA in vivo and in vitro 4 and has been reported to actively demethylate DNA (ref. 8). As DNA methylation causes gene silencing, the MBD2 demethylase is a candidate transcriptional activator. Using specific antibodies, however, we find here that MBD2 in HeLa cells is associated with histone deacetylase (HDAC) in the MeCP1 repressor complex 1, 9. An affinity-purified HDAC1 corepressor complex 10, 11 also contains MBD2, suggesting that MeCP1 corresponds to a fraction of this complex. Exogenous MBD2 represses transcription in a transient assay, and repression can be relieved by the deacetylase inhibitor trichostatin A (TSA; ref. 12). In our hands, MBD2 does not demethylate DNA. Our data suggest that HeLa cells, which lack the known methylation-dependent repressor MeCP2, use an alternative pathway involving MBD2 to silence methylated genes.