DNA methylation is one of the major epigenetic marks in the mammalian genome to define chromatin higher-order structure, and plays essential roles in various developmental processes. In the mammalian genome, DNA methylation mainly occurs at the 5th position of cytosine bases in a palindromic 5'-CG-3'dinucleotide sequence. Methyl CpG binding domain (MBD) proteins recognize symmetrically methylated CpG sites (5mCG/5mCG) through a conserved MBD, and recruit transcriptional repressors or chromatin modifiers. One of the MBD proteins, MBD4, uniquely contains a C-terminal glycosylation domain together with an N-terminal MBD, and functions as a mismatch DNA repair enzyme specific for T/G or U/G mismatch bases generated by spontaneous deamination of 5-methylcytosine. The base excision activity of MBD4 is also implicated in active DNA demethylation initiated by the conversion of 5-methylcytosine to thymine by deaminases. Unlike other MBD proteins, MBD4 recognizes not only 5mCG/5mCG but also T/G mismatched sites generated by spontaneous deamination of 5-methylcytosine (5mCG/TG). In addition, our biochemical data demonstrate that MBD also binds to intermediates in DNA demethylation pathways, such as 5-hydroxymethyl-cytosine (hmC), 5-carboxyl-cytosine and 5-hydroxy-uracil. The crystal structures of MBDMBD4 in complex with 5mCG/TG, 5mCG/5mCG or 5mCG/hmCG provide new structural insights into the versatility of base recognition by MBD4. A DNA interface of MBD4 has flexible structural features, in which an extensive hydration water network supports the versatile base specificity of MBD4. The versatile base recognition by MBDMBD4 implies multi-functional roles of MBD4 in the regulation of dynamic DNA methylation patterns.