Transcriptional silencing of hypermethylated tumour suppressor genes is a hallmark of tumorigenesis but the underlying mechanism remains enigmatic. Here we show that methyl-CpG-binding domain protein 2 (MBD2) forms nuclear condensate in diverse cancer cells, where it assembles and navigates the chromatin remodeller NuRD complex to these gene loci for transcriptional suppression, thus fuelling tumour growth. Disturbance of MBD2 condensate reduces the level of NuRD complex-specific proteins, destabilizes heterochromatin foci, facilitates chromatin relaxation and consequently impedes tumour progression. We demonstrate that MBD2 condensate is redox sensitive, mediated by C359. Pro-oxidative interventions disperse MBD2-NuRD condensate, thereby alleviating the transcriptional repression of tumour suppressor genes. Our findings illuminate a hitherto unappreciated function of MBD2 condensate in sustaining a repressive chromatin state essential for cancer cell proliferation and suggest an oxidative stress targeting approach for malignancies with excessive MBD2 condensate.