Methylation of DNA at the dinucleotide CpG is essential for mammalian development and is correlated with stable transcriptional silencing 1, 2, 3. This transcriptional silencing has recently been linked at a molecular level to histone deacetylation through the demonstration of a physical association between histone deacetylases and the methyl CpG-binding protein MeCP2 (refs 4, 5). We previously purified a histone deacetylase complex from Xenopus laevis egg extracts that consists of six subunits, including an Rpd3-like deacetylase, the RbA p48/p46 histone-binding protein and the nucleosome-stimulated ATPase Mi-2 (ref. 6). Similar species were subsequently isolated from human cell lines 7, 8, 9, implying functional conservation across evolution. This complex represents the most abundant form of deacetylase in amphibian eggs and cultured mammalian cells 6, 7, 8, 9. Here we identify the remaining three subunits of this enzyme complex. One of them binds specifically to methylated DNA in vitro and molecular cloning reveals a similarity to a known methyl CpG-binding protein. Our data substantiate the mechanistic link between DNA methylation, histone deacetylation and transcriptional silencing.