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Methylation of DNA at position five of the cytosine ring occurs at most CpG dinucleotides in the mammalian genome and is essential for embryonic viability. With several of the key proteins now known, it has become possible to approach the biological significance of this epigenetic system through both biochemistry and genetics. As a result, advances have been made in our understanding of the mechanisms by which DNA methylation is targeted to specific regions of the genome and interpreted by methyl-CpG-binding proteins. Recent studies have illuminated the role of DNA methylation in controlling gene expression and have strengthened its links with histone modification and chromatin remodelling.