Binds CpG islands in promoters where the DNA is methylated at position 5 of cytosine within CpG dinucleotides. Binds hemimethylated DNA as well. Recruits histone deacetylases and DNA methyltransferases. Acts as transcriptional repressor and plays a role in gene silencing. Functions as a scaffold protein, targeting GATAD2A and GATAD2B to chromatin to promote repression. May enhance the activation of some unmethylated cAMP-responsive promoters. Heterodimer with MBD3. Component of the MeCP1 complex that contains HDAC1 and HDAC2. Binds DNMT1, MIZF, GPN1, SIN3A, GATAD2A/p66-alpha and GATAD2B/p66-beta. Interacts with DHX9. Interacts with SPHK2 (PubMed:19729656). Nuclear, in discrete foci. Detected at replication foci in late S phase. Highly expressed in brain, heart, kidney, stomach, testis and placenta. Incomplete sequence. Functional studies (PubMed:10050851, PubMed:10950960 and PubMed:12665568) have used a C-terminal fragment of isoform 1 which has been described originally as isoform MBD2b but cannot however be proven by supporting cDNA sequences.