The thymine DNA glycosylase (TDG) is a multifunctional enzyme, which is essential for embryonic development. It mediates the base excision repair (BER) of G:T and G:U DNA mismatches arising from the deamination of 5-methyl cytosine (5-MeC) and cytosine, respectively. Recent studies have pointed at a role of TDG during the active demethylation of 5-MeC within CpG islands. TDG interacts with the histone acetylase CREB-binding protein (CBP) to activate CBP-dependent transcription. In addition, TDG also interacts with the retinoic acid receptor α (RARα), resulting in the activation of RARα target genes. Here we provide evidence for the existence of a functional ternary complex containing TDG, CBP and activated RARα. Using global transcriptome profiling, we uncover a coupling of de novo methylation-sensitive and RA-dependent transcription, which coincides with a significant subset of CBP target genes. The introduction of a point mutation in TDG, which neither affects overall protein structure nor BER activity, leads to a significant loss in ternary complex stability, resulting in the deregulation of RA targets involved in cellular networks associated with DNA replication, recombination and repair. We thus demonstrate for the first time a direct coupling of TDG’s epigenomic and transcription regulatory function through ternary complexes with CBP and RARα.