Methylation of DNA is essential for development in the mouse and plays an important role in inactivation of the X-chromosome, genomic imprinting and gene silencing. The properties of the methyl-CpG binding proteins (MeCPs) are being proved to be the key to interpreting the connection between DNA methylation and transcriptional repression. The founder member of the family, MeCP2, consists of a single polypeptide that contains both a methyl-CpG binding domain (MBD) and transcriptional repression domain (TRD). MBD binds to a single symmetrically methylated CpG site and is responsible for chromatin localization of the protein. NMR studies have revealed that the MBD adopts a wedge-shaped molecular structure. The TRD interacts with Sin3, which is known to form complexes with histone deacetylases. MeCP2-mediated transcriptional repression may involve two distinct mechanisms, one being dependent on chromatin modification by histone deacetylation and the other being chromatin independent. Mutations in MeCP2 gene cause the X-linked neurodevelopmental disease Rett syndrome. The spectrum of mutations reflects the importance of the MBD and TRD domains. We speculate that abnormal gene expression in Rett patients leads to dysfunction of the central nervous system. We propose a genetic therapeutic approach based on activation of the wild type copy of the MeCP2 gene located in the inactive X chromosome.