Transcriptional repressor that binds CpG islands in promoters where the DNA is methylated at position 5 of cytosine within CpG dinucleotides. Binding is abolished by the presence of 7-mG that is produced by DNA damage by methylmethanesulfonate (MMS). Acts as transcriptional repressor and plays a role in gene silencing by recruiting ATF7IP, which in turn recruits factors such as the histone methyltransferase SETDB1. Probably forms a complex with SETDB1 and ATF7IP that represses transcription and couples DNA methylation and histone 'Lys-9' trimethylation. Isoform 1 can also repress transcription from unmethylated promoters. Interacts with OASL, ATF7IP, ATF7IP2 and BAHD1. Binds CHAF1A and the SUV39H1-CBX5 complex via the MBD domain. Binds MGP via the TRD domain. May be part of the MeCP1 complex. During DNA replication, it recruits SETDB1 to form a S phase-specific complex that facilitates methylation of H3 'Lys-9' during replication-coupled chromatin assembly and is at least composed of the CAF-1 subunit CHAF1A, MBD1 and SETDB1 (By similarity). Interacts with the Ten-1 ICD form of TENM1. Nuclear, in a punctate pattern. Associated with euchromatic regions of the chromosomes. Colocalizes with the Ten-1 ICD form of TENM1 in foci associated with the nuclear matrix. Highly expressed in kidney, liver and brain. Detected at lower levels in heart, lung, skeletal muscle, spleen and testis. The methyl-CpG-binding domain (MBD) functions both in binding to methylated DNA and in protein interactions. The third CXXC-type zinc finger mediates binding to DNA containing unmethylated CpG dinucleotides. The transcriptional repression domain (TRD) is involved in transcription repression and in protein interactions. Sumoylated, sumoylation may increase interaction with ATF7IP.