DNA methylation is essential for the survival and development of vertebrates. Methylated cytosine in the context of CpG-dinucleotides within the genome is recognized by proteins from the methyl-CpG DNA binding domain (MBD) family. When bound to methyl-CpG DNA, most MBD proteins can recruit histone deacetylase (HDAC) silencing complexes to the site of chromatin to remodel its structure, and this causes transcription repression. Loss of CpG-DNA methylation results in embryonic lethality in mice, but loss of methyl-CpG DNA recognizing MBD proteins produce a viable phenotype. Our interest in MBD proteins arises from our discovery that a subset of them interact with RNA. Two MBD proteins (MBD2 and MeCP2) bind their RNA partners using a domain that contains arginine and glycine (RG) rich motifs. As proteins with RG rich motifs are often substrates of post-translational modifications catalyzed by Protein Arginine Methyltransferase (PRMT), I asked whether the two MBD proteins are methylated at their arginines, and the consequences of such modification. By in vitro and in vivo labeling assays, I ascertained that MBD2 and MeCP2 are substrates of PRMT, and that PRMT1 and PRMT5 are responsible for catalyzing different forms of methylation on the MBD2 protein. The relationship between the two PRMTs with regard to MBD2 methylation was characterized. Subsequently, I identified the significance of MBD2 arginine methylation. Biochemically, methylated species of MBD2 protein have less affinity for the HDAC silencing complex and methyl-CpG DNA. In cells, the loss in repression activity of arginine methylated MBD2 was demonstrated. As MBD2 mediated repression activity can be relieved by arginine methylation, I propose that this mechanism might possibly explains the discrepancy between the phenotypes of CpG-DNA methylation null and MBD null mice. This study provides the first evidence that PRMT participate in the DNA methylation system of chromatin control.