Methyl-CpG binding domain (MBD) proteins and ten-eleven-translocation (TET) dioxygenases are the readers and erasers of 5-methylcytosine (5mC), the central epigenetic mark of mammalian DNA. We employ light-activatable human TET1 controlled by a genetically encoded photocaged serine to enable in vivo kinetic studies of their interplay at the common substrate methylated cytosine-guanine (mCpG). We identify the multidomain reader MBD1 to negatively regulate TET1-catalyzed 5mC oxidation kinetics via its mCpG-binding MBD domain. However, we also identify the third Cys-x-x-Cys (CXXC3) domain of MBD1 to promote oxidation kinetics by TET1, dependent on its ability to bind nonmethylated CpG, the final product of TET-mediated mCpG oxidation and active demethylation. In contrast, we do not observe differences in TET1 regulation for MBD1 variants with or without the transcriptional repressor domain. Our approach reveals a complex, domain-dependent interplay of these readers and erasers of 5mC with different domain-specific contributions of MBD1 to the overall kinetics of TET1-catalyzed global 5mC oxidation kinetics that contribute to a better understanding of dynamic methylome shaping.