DNA methylation in animals is thought to repress transcription via methyl-CpG specific binding proteins, which recruit enzymatic machinery promoting the formation of inactive chromatin at targeted loci. Loss of DNA methylation can result in the activation of normally silent genes during mouse and amphibian development. Paradoxically, global changes in gene expression have not been observed in mice that are null for the methyl-CpG specific repressors MeCP2, MBD1 or MBD2. Here, we demonstrate that xKaiso, a novel methyl-CpG specific repressor protein, is required to maintain transcription silencing during early Xenopus laevis development. In the absence of xKaiso function, premature zygotic gene expression occurs before the mid-blastula transition (MBT). Subsequent phenotypes (developmental arrest and apoptosis) strongly resemble those observed for hypomethylated embryos. Injection of wild-type human kaiso mRNA can rescue the phenotype and associated gene expression changes of xKaiso-depleted embryos. Our results, including gene expression profiling, are consistent with an essential role for xKaiso as a global repressor of methylated genes during early vertebrate development.