Active DNA demethylation plays crucial roles in the regulation of gene expression in both plants and animals. In Arabidopsis thaliana, active DNA demethylation is initiated by the ROS1 subfamily of 5-methylcytosine-specific DNA glycosylases via a base excision repair mechanism. Recently, IDM1 and IDM2 were shown to be required for the recruitment of ROS1 to some of its target loci. However, the mechanism(s) by which IDM1 is targeted to specific genomic loci remains to be determined. Affinity purification of IDM1- and IDM2- associating proteins demonstrated that IDM1 and IDM2 copurify together with two novel components, methyl-CpG-binding domain protein 7 (MBD7) and IDM2-like protein 1 (IDL1). IDL1 encodes an α-crystallin domain protein that shows high sequence similarity with IDM2. MBD7 interacts with IDM2 and IDL1 in vitro and in vivo and they form a protein complex associating with IDM1 in vivo. MBD7 directly binds to the target loci and is required for the H3K18 and H3K23 acetylation in planta. MBD7 dysfunction causes DNA hypermethylation and silencing of reporter genes and a subset of endogenous genes. Our results suggest that a histone acetyltransferase complex functions in active DNA demethylation and in suppression of gene silencing at some loci in Arabidopsis.