Evidence that direct inhibition of transcription factor binding is the prevailing mode of gene and repeat repression by DNA methylation.

Cytosine methylation efficiently silences CpG-rich regulatory regions of genes and repeats in mammalian genomes. To what extent this entails direct inhibition of transcription factor (TF) binding versus indirect inhibition via recruitment of methyl-CpG-binding domain (MBD) proteins is unclear. Here we show that combinatorial genetic deletions of all four proteins with functional MBDs in mouse embryonic stem cells, derived neurons or a human cell line do not reactivate genes or repeats with methylated promoters. These do, however, become activated by methylation-restricted TFs if DNA methylation is removed. We identify several causal TFs in neurons, including ONECUT1, which is methylation sensitive only at a motif variant. Rampantly upregulated retrotransposons in methylation-free neurons feature a CRE motif, which activates them in the absence of DNA methylation via methylation-sensitive binding of CREB1. Our study reveals methylation-sensitive TFs in vivo and argues that direct inhibition, rather than indirect repression by the tested MBD proteins, is the prevailing mechanism of methylation-mediated repression at regulatory regions and repeats.