Abstract: Insulators play a critical role in spatiotemporal gene regulation in animals. The evolutionarily conserved CCCTC-binding factor (CTCF) is required for insulator function in mammals, but not all of its binding sites act as insulators. Here we explore the sequence requirements of CTCF-mediated transcriptional insulation using a sensitive insulator reporter in mouse embryonic stem cells. We find that insulation potency depends on the number of CTCF-binding sites in tandem. Furthermore, CTCF-mediated insulation is dependent on upstream flanking sequences at its binding sites. CTCF-binding sites at topologically associating domain boundaries are more likely to function as insulators than those outside topologically associating domain boundaries, independently of binding strength. We demonstrate that insulators form local chromatin domain boundaries and weaken enhancer–promoter contacts. Taken together, our results provide genetic, molecular and structural evidence connecting chromatin topology to the action of insulators in the mammalian genome.