MeCP2 is a chromosomal protein that is concentrated in the centromeric heterochromatin of mouse cells. In vitro, the protein binds preferentially to DNA containing a single symmetrically methylated CpG. To find out whether the heterochromatic localization of MeCP2 depended on DNA methylation, we transiently expressed MeCP2-LacZ fusion proteins in cultured cells. Intact protein was targeted to heterochromatin in wild-type cells but was inefficiently localized in mutant cells with low levels of genomic DNA methylation. Deletions within MeCP2 showed that localization to heterochromatin required the 85-amino-acid methyl-CpG binding domain but not the remainder of the protein. Thus MeCP2 is a methyl-CpG-binding protein in vivo and is likely to be a major mediator of downstream consequences of DNA methylation.