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Cytosine methylation at CpG sites is often negatively correlated with mammalian gene activity. Many transcription factors whose DNA binding site contains one or more CpG dinucleotides are no longer able to efficiently bind DNA when the site is methylated. A notable exception is the zinc finger factor Sp1 which binds DNA and activates transcription even when its binding site is methylated. Here we show that two other zinc finger factors, MTF-1 and Krox-20, can also bind to CpG methylated sites. MTF-1 regulates metallothionein gene transcription by binding to a number of metal responsive elements (MREs), and Krox-20 regulates Hox genes during hindbrain segmentation. However, a refined analysis of MTF-1/MRE binding shows that methylation is not tolerated at every binding site: the highest affinity site in the mouse metallothionein I gene, MREd, is unaffected by methylation, while two other MRE sites with CpGs at different positions are rendered partially or completely nonfunctional by methylation. Both methylation sensitive and insensitive factors/binding sites are likely to determine the developmental expression pattern of a gene.