Drosophila Mi-2 (dMi-2) is the ATPase subunit of a complex combining ATP-dependent nucleosome remodelling and histone deacetylase activities. dMi-2 contains an HMG box-like region, two PHD fingers, two chromodomains and a SNF2-type ATPase domain. It is not known which of these domains contribute to nucleosome remodelling. We have tested a panel of dMi-2 deletion mutants in ATPase, nucleosome mobilization and nucleosome binding assays. Deletion of the chromodomains impairs all three activities. A dMi-2 mutant lacking the chromodomains is incorporated into a functional histone deacetylase complex in vivo but has lost nucleosome-stimulated ATPase activity. In contrast to dHP1, dMi-2 does not bind methylated histone H3 tails and does not require histone tails for nucleosome binding. Instead, the dMi-2 chromodomains display DNA binding activity that is not shared by other chromodomains. Our results suggest that the chromodomains act at an early step of the remodelling process to bind the nucleosome substrate predominantly via protein-DNA interactions. Furthermore, we identify DNA binding as a novel chromodomain-associated activity.