The genes of the vertebrate beta-globin locus undergo a switch in expression during erythroid development whereby embryonic/fetal genes of the cluster are sequentially silenced and adult genes are activated. We describe here a role for DNA methylation and MBD2 in the silencing of the human fetal gamma-globin gene. The gamma-globin gene is reactivated upon treatment with the DNA methyltransferase inhibitor 5-azacytidine in the context of a mouse containing the entire human beta-globin locus as a yeast artificial chromosome (betaYAC) transgene. To elucidate the mechanism through which DNA methylation represses the gamma-globin gene in adult erythroid cells, betaYAC/MBD2-/- mice were generated by breeding betaYAC mice with MBD2-/- mice. Adult betaYAC/MBD2-/- mice continue to express the gamma-globin gene at a level commensurate with 5-azacytidine treatment, 10- to 20-fold over that observed with 1-acetyl-2-phenylhydrazine treatment alone. In addition, the level of gamma-globin expression is consistently higher in MBD2-/- mice in 14.5- and 16.5-days postcoitus fetal liver erythroblasts suggesting a role for MBD2 in embryonic/fetal erythroid development. DNA methylation levels are modestly decreased in MBD2-/- mice. MBD2 does not bind to the gamma-globin promoter region to maintain gamma-globin silencing. Finally, treatment of MBD2-null mice with 5-azacytidine induces only a small, nonadditive induction of gamma-globin mRNA, signifying that DNA methylation acts primarily through MBD2 to maintain gamma-globin suppression in adult erythroid cells.