Rett syndrome (RTT) is a severe neurodevelopmental disorder primarily caused by heterozygous loss-of-function mutations in the X-linked gene methyl-CpG-binding protein 2 (MECP2) that is a global transcriptional regulator. Mutations in the methyl-binding domain (MBD) of MECP2 disrupt its interaction with methylated DNA required for proper function in the brain. Here, we investigate the effect of a novel MECP2 L124W missense mutation in the MBD in comparison to MECP2 null mutations. L124W protein had a limited ability to disrupt heterochromatic chromocenters due to decreased binding dynamics. We isolated two pairs of isogenic WT and L124W induced pluripotent stem cell lines. L124W induced excitatory neurons expressed stable protein, exhibited only increased input resistance and impaired voltage-gated Na+ and K+ currents, and their neuronal dysmorphology was limited to reduced dendritic complexity. Three isogenic pairs of MECP2 null neurons had the expected more pronounced morphological and electrophysiological phenotypes, exhibiting decreased soma area, dendrite length, capacitance and excitatory synaptic function. We examined development and maturation of excitatory neural networks using micro-electrode arrays to detect alterations in RTT connectivity. The L124W neurons had no detectable changes in network circuitry features, in contrast to MECP2 null neurons that suffered a significant change in synchronous network burst frequency and a transient extension of network burst duration. Our results from stem cell-derived RTT excitatory neurons reveal a wide range of morphological, electrophysiological and circuitry phenotypes that reflect the severity of the MECP2 mutation.