Updated publication reference for PubMed record(s): 34234345. While the majority of RNA polymerase II initiation events in mammalian genomes take place within CpG island (CGI) promoters, our understanding of their regulation remains limited. Here we combine single-molecule footprinting with interaction proteomics to identify BANP as a critical CGI regulator and the long sought-after TF that binds the orphan CGCG element in mouse and human. We show that BANP drives the activity of essential metabolic genes in the mouse genome in pluripotent and terminally differentiated cells. However, BANP binding is strongly repelled by DNA methylation of its motif in vitro and in vivo, which epigenetically restricts most binding to CGIs and accounts for its absence at aberrantly methylated CGIs in cancer cells. Upon binding to an unmethylated motif, BANP opens chromatin and phases nucleosomes. Our results establish Banp as a critical activator and put forth a model whereby CGI promoter activity relies on methylation-sensitive TFs capable of chromatin opening.