To gain insight into the cellular readout of DNA methylation, we established a strategy for systematically profiling the genome-wide distribution of chromatin-interacting factors. This enabled us to create genomic maps for the methyl-CpG-binding domain (MBD) family of proteins, including disease-relevant mutants, deletions, and isoforms. In vivo binding of MBD proteins occurs predominantly as a linear function of local methylation density, requiring functional MBD domains and methyl-CPGs. This interaction directs specificity of MBD proteins to methylated, CpG-dense, and inactive regulatory regions. In contrast, binding to unmethylated sites varies between MBD proteins and is mediated via alternative domains or protein-protein interactions. Such targeting is exemplified by NuRD-complex-mediated tethering of MBD2 to a subset of unmethylated, active regulatory regions. Interestingly, MBD3 also occupies these sites, but like MBD2, binding is independent of the presence of hydroxymethylation. These functional binding maps reveal methylation-dependent and -independent binding modes and revise current models of DNA methylation readout through MBD proteins.