MCAF mediates MBD1-dependent transcriptional repression.

DNA methylation is involved in a variety of genome functions, including gene control and chromatin dynamics. MBD1 is a transcriptional regulator through the cooperation of a methyl-CpG binding domain, cysteine-rich CXXC domains, and a transcriptional repression domain. A yeast two-hybrid screen was performed to investigate the role of MBD1 in methylation-based transcriptional repression. We report a mediator, MBD1-containing chromatin-associated factor (MCAF), that interacts with the transcriptional repression domain of MBD1. MCAF harbors two conserved domains that allow it to interact with MBD1 and enhancer-like transactivator Sp1. MCAF possesses a coactivator-like activity, and it seems to facilitate Sp1-mediated transcription. In contrast, the MBD1-MCAF complex blocks transcription through affecting Sp1 on methylated promoter regions. These data provide a mechanistic basis for direct inhibition of gene expression via methylation-dependent and histone deacetylation-resistant processes.