Several mammalian proteins involved in chromatin and DNA modification contain CXXC zinc finger domains. We compared the structure and function of the CXXC domains in the DNA methyltransferase Dnmt1 and the methylcytosine dioxygenase Tet1. Sequence alignment showed that both CXXC domains have a very similar framework but differ in the central tip region. Based on the known structure of a similar MLL1 domain we developed homology models and designed expression constructs for the isolated CXXC domains of Dnmt1 and Tet1 accordingly. We show that the CXXC domain of Tet1 has no DNA binding activity and is dispensable for catalytic activity in vivo. In contrast, the CXXC domain of Dnmt1 selectively binds DNA substrates containing unmethylated CpG sites. Surprisingly, a Dnmt1 mutant construct lacking the CXXC domain formed covalent complexes with cytosine bases both in vitro and in vivo and rescued DNA methylation patterns in dnmt1−/− embryonic stem cells (ESCs) just as efficiently as wild type Dnmt1. Interestingly, neither wild type nor ΔCXXC Dnmt1 re-methylated imprinted CpG sites of the H19a promoter in dnmt1−/− ESCs, arguing against a role of the CXXC domain in restraining Dnmt1 methyltransferase activity on unmethylated CpG sites.