The tumour-suppressor gene CDKN1A (encoding p21Waf/Cip1) is thought to be epigenetically repressed in cancer cells. FBI-1 (ZBTB7A) is a proto-oncogenic transcription factor repressing the alternative reading frame and p21WAF/CDKN1A genes of the p53 pathway. FBI-1 interacts directly with MBD3 (methyl-CpG-binding domain protein 3) in the nucleus. We demonstrated that FBI-1 binds both non-methylated and methylated DNA and that MBD3 is recruited to the CDKN1A promoter through its interaction with FBI-1, where it enhances transcriptional repression by FBI-1. FBI-1 also interacts with the co-repressors nuclear receptor corepressor (NCoR), silencing mediator for retinoid and thyroid receptors (SMRT) and BCL-6 corepressor (BCoR) to repress transcription. MBD3 regulates a molecular interaction between the co-repressor and FBI-1. MBD3 decreases the interaction between FBI-1 and NCoR/SMRT but increases the interaction between FBI-1 and BCoR. Because MBD3 is a subunit of the Mi-2 autoantigen (Mi-2)/nucleosome remodelling and histone deacetylase (NuRD)-HDAC complex, FBI-1 recruits the Mi-2/NuRD-HDAC complex via MBD3. BCoR interacts with the Mi-2/NuRD-HDAC complex, DNMTs and HP1. MBD3 and BCoR play a significant role in the recruitment of the Mi-2/NuRD-HDAC complex- and the NuRD complex-associated proteins, DNMTs and HP. By recruiting DNMTs and HP1, Mi-2/NuRD-HDAC complex appears to play key roles in epigenetic repression of CDKN1A by DNA methylation.