We have previously shown that in vivo estradiol-dependent dephosphorylation of MDBP-2-H1 (a member of the histone H1 family) correlates with the loss of in vitro preferential binding to methylated DNA, To study the effects of the phosphorylation/dephosphorylation of MDBP-2-H1 on the expression of the avian vitellogenin II gene, we optimised an in vitro transcription system using HeLa nuclear extracts, We show that in the absence of the phosphorylated form of MDBP-2-H1 from rooster, methylation of the vitellogenin II promoter does not affect the transcription, Addition of purified MDBP-2-H1 from rooster to the in vitro transcription system inhibits transcription more efficiently from a methylated than an unmethylated DNA template, Dephosphorylation of rooster MDBP-2-H1 by phosphatase treatment or estradiol treatment of rooster lead to the loss of inhibitory activity of the protein when added to the in vitro transcription assays, These findings indicate that the phosphorylation of MDBP-2-H1 is essential for the repression of the transcription, Taken together these results establish the relationship between the dephosphorylation of MDBP-2-H1 caused by estradiol, the down regulation of its binding activity to methylated DNA and the derepression of vitellogenin II transcription.