Methyl-CpG binding domain protein 5 (MBD5) belongs to the MBD family proteins, which play central roles in transcriptional regulation and development. The significance of MBD5 function is highlighted by recent studies implicating it as a candidate gene involved in human 2q23.1 microdeletion syndrome. To investigate the physiological role of Mbd5, we generated knockout mice. The Mbd5-deficient mice showed growth retardation, wasting and pre-weaning lethality. The observed growth retardation was associated with the impairment of GH/IGF-1 axis in Mbd5-null pups. Conditional knockout of Mbd5 in the brain resulted in the similar phenotypes as whole body deletion, indicating that Mbd5 functions in the nervous system to regulate postnatal growth. Moreover, the mutant mice also displayed enhanced glucose tolerance and elevated insulin sensitivity as a result of increased insulin signaling, ultimately resulting in disturbed glucose homeostasis and hypoglycemia. These results indicate Mbd5 as an essential factor for mouse postnatal growth and maintenance of glucose homeostasis.