CpG islands (CGIs) are key regulatory DNA elements at most promoters, but how they influence the chromatin status and transcription remains elusive. Here, we identify and characterize SAMD1 (SAM domain-containing protein 1) as an unmethylated CGI-binding protein. SAMD1 has an atypical winged-helix domain that directly recognizes unmethylated CpG-containing DNA via simultaneous interactions with both the major and the minor groove. The SAM domain interacts with L3MBTL3, but it can also homopolymerize into a closed pentameric ring. At a genome-wide level, SAMD1 localizes to H3K4me3-decorated CGIs, where it acts as a repressor. SAMD1 tethers L3MBTL3 to chromatin and interacts with the KDM1A histone demethylase complex to modulate H3K4me2 and H3K4me3 levels at CGIs, thereby providing a mechanism for SAMD1-mediated transcriptional repression. The absence of SAMD1 impairs ES cell differentiation processes, leading to misregulation of key biological pathways. Together, our work establishes SAMD1 as a newly identified chromatin regulator acting at unmethylated CGIs.