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 and isoform 2 can also repress transcription from unmethylated promoters. Interacts with OASL, ATF7IP, ATF7IP2 and BAHD1 (PubMed:12665582, PubMed:14728690, PubMed:15691849, PubMed:16757475, PubMed:19666599). Binds CHAF1A and the SUV39H1-CBX5 complex via the MBD domain (PubMed:12697822, PubMed:12711603). Binds MGP via the TRD domain (PubMed:14555760). May be part of the MeCP1 complex (PubMed:9207790). Nuclear, in a punctate pattern (PubMed:12711603). Associated with euchromatic regions of the chromosomes, with pericentromeric regions on chromosome 1 and with telomeric regions from several chromosomes (PubMed:10648624, PubMed:10454587). Widely expressed. Up-regulated by interferon. 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. Was reported to recruit SETDB1 during DNA replication, to form a S phase-specific complex that would facilitate methylation of H3 'Lys-9' during replication-coupled chromatin assembly and vould be at least composed of the CAF-1 subunit CHAF1A, MBD1 and SETDB1 (PubMed:15327775). The interaction with SETDB1 was also reported to be inhibited by sumoylation at Lys-499 and Lys-538 (PubMed:17066076). However, these papers have been retracted because some data, results and conclusions are not reliable (PubMed:30849389, PubMed:31612521).