The majority of 5-methylcytosine in mammalian DNA resides in endogenous transposable elements and is associated with the transcriptional silencing of these parasitic elements. Methylation also plays an important role in the silencing of exogenous retroviruses. One of the difficulties inherent in the study of proviral silencing is that the sites in which proviruses randomly integrate influence the probability of de novo methylation and expression. In order to compare methylated and unmethylated proviruses at the same genomic site, we used a recombinase-based targeting approach to introduce an in vitro methylated or unmethylated Moloney murine leukemia-based provirus in MEL cells. The methylated and unmethylated states are maintained in vivo, with the exception of the initially methylated proviral enhancer, which becomes demethylated in vivo. Although the enhancer is unmethylated and remodeled, the methylated provirus is transcriptionally silent. To further analyze the repressed state, histone acetylation status was determined by chromatin immunoprecipitation (ChIP) analyses, which revealed that localized histone H3 but not histone H4 hyperacetylation is inversely correlated with proviral methylation density. Since members of the methyl-CpG binding domain (MBD) family of proteins recruit histone deacetylase activity, these proteins may play a role in proviral repression. Interestingly, only MBD3 and MeCP2 are expressed in MEL cells. ChIPs with antibodies specific for these proteins revealed that only MeCP2 associates with the provirus in a methylation-dependent manner. Taken together, our results suggest that MeCP2 recruitment to a methylated provirus is sufficient for transcriptional silencing, despite the presence of a remodeled enhancer.Cytosines in the context of a CpG dinucleotide are frequently methylated in mammalian cells. Such methylation is associated with the transcriptionally repressed state of imprinted genes and endogenous retroelements. Although DNA methylation can repress transcription by directly interfering with the binding of sequence-specific transcription factors (27), the recent discovery and biochemical characterization of the methyl-CpG binding domain (MBD) family of proteins (24) have revealed that an indirect mechanism of methylation-mediated repression also exists. Several MBD proteins, including MBD1 (20), MBD2 (40), MBD3 (47), and the archetypal MeCP2 (38), are thought to play a role in transcriptional repression. The discovery that MeCP2 interacts with a histone deacetylase (HDAC)-containing core complex via recruitment of the Sin3A corepressor (30, 39) has revealed that MeCP2 may function in part by recruiting deacetylase activity to methylated DNA. The recent finding that MBD2 interacts with the Mi-2/NuRD repressor complex, of which MBD3 is an integral subunit (47, 52), and the same HDAC-containing core complex suggests that alteration of the local chromatin structure via recruitment of complexes containing HDACs may be a general mechanism by which MBD proteins mediate transcription...