Methyl-CpG-binding protein 2 (MeCP2) is an essential chromatin-binding protein whose mutations cause Rett syndrome (RTT), a leading cause of monogenic intellectual disabilities in females. Despite its significant biomedical relevance, the mechanism by which MeCP2 navigates the chromatin epigenetic landscape to regulate chromatin structure and gene expression remains unclear. Here, we used correlative single-molecule fluorescence and force microscopy to directly visualize the distribution and dynamics of MeCP2 on a variety of DNA and chromatin substrates. We found that MeCP2 exhibits differential diffusion dynamics when bound to unmethylated and methylated bare DNA. Moreover, we discovered that MeCP2 preferentially binds nucleosomes within the context of chromatinized DNA and stabilizes them from mechanical perturbation. The distinct behaviors of MeCP2 at bare DNA and nucleosomes also specify its ability to recruit TBLR1, a core component of the NCoR1/2 co-repressor complex. We further examined several RTT mutations and found that they disrupt different aspects of the MeCP2-chromatin interaction, rationalizing the heterogeneous nature of the disease. Our work reveals the biophysical basis for MeCP2’s methylation-dependent activities and suggests a nucleosome-centric model for its genomic distribution and gene repressive functions. These insights provide a framework for delineating the multifaceted functions of MeCP2 and aid in our understanding of the molecular mechanisms of RTT.