The link between DNA methylation and neurodevelopmental disorders is well established. However, how DNA methylation is fine-tuned—ensuring precise gene expression and developmental fidelity—remains poorly understood. PROSER1, a known TET2 interactor, was recently linked to a severe neurodevelopmental disorder. Here, we demonstrate that PROSER1 interacts with all TET enzymes and stabilizes chromatin-bound TET–OGT–PROSER1–DBHS (TOPD) complexes, which regulate DNA demethylation and developmental gene expression. Surprisingly, we found that PROSER1 also sequesters TET enzymes, preventing widespread demethylation and transposable element derepression. Our findings identify PROSER1 as a key factor that both positively and negatively regulates DNA demethylation essential for mammalian neurodevelopment.