Classical methyl-CpG binding proteins contain the conserved DNA binding motif methyl-cytosine binding domain (MBD), which preferentially binds to methylated CpG dinucleotides. These proteins serve as transcriptional repressors, mediating gene silencing via DNA cytosine methylation. Mutations in methyl-CpG binding protein 2 (MeCP2) have been linked to the human mental retardation disorder Rett syndrome, suggesting an important role for methyl-CpG binding proteins in brain development and function. This mini-review summarizes the recent advances in studying the diverse functions of MeCP2 as a prototype for other methyl-CpG binding proteins in the development and function of the vertebrate nervous system.