Differential methylation of CpG sites in the promoter region of the mouse Xist gene is correlated with Xist expression and X-chromosome inactivation in the female. Using oligonucleotides encompassing the differentially methylated sites as probes in band-shift assays, we have identified a nuclear protein which binds to a specific region of the promoter (between base pairs -45 and -30 upstream from the transcription start site) only when CpG sites within the CG rich region (GCGCCGCGG, -44 to -36) are methylated. Competition experiments with methylated or unmethylated heterologous oligonucleotides demonstrate that the activity is sequence-specific as well as methylation-dependent. Analysis by Southwestern blot identifies a protein of approximately 100 kDa molecular weight and confirms strong binding to the methylated Xist promoter oligonucleotide. Using a 233bp Xist-promoter luciferase construct in which the cytosines in the three CpG sites in the -44 to -36 region are mutated to thymine, we have established that this region is required for transcription from the mouse Xist promoter. Therefore, we suggest that the binding of the 100kDa protein to the methylated sequence leads to repression of transcription from the methylated Xist allele, thus suggesting a role in the regulation of both imprinted and random Xist transcription and X-chromosome inactivation.