We describe a novel mammalian DNA binding activity that requires at least two symmetrically methylated CpG dinucleotides in its recognition sequence, preferably within the sequence 5′CGCG. A key component of the activity is Kaiso, a protein with POZ and zinc-finger domains that is known to associate with p120 catenin. We find that Kaiso behaves as a methylation-dependent transcriptional repressor in transient transfection assays. Kaiso is a constituent of one of two methyl–CpG binding complexes originally designated as MeCP1. The data suggest that zinc-finger motifs are responsible for DNA binding, and may therefore target repression to specific methylated regions of the genome. As Kaiso associates with p120 catenin, Kaiso may link events at the cell surface with DNA methylation-dependent gene silencing.