The orphan nuclear receptor TR2 interacts directly with histone deacetylase HDAC3 and HDAC4. We now report that two domains of HDAC3 are involved in its interaction with TR2. GST pull-down assays show that both the N-terminal (residues 1-135) and the C-terminal (residues 210-428) segments of HDAC3 directly interact with TR2. The interaction is also demonstrated in coimmunoprecipitation experiments. The two TR2-binding sites of HDAC3 compete with each other for binding to TR2. The two receptor-interacting domains (RIDs) of HDAC3 were further dissected and mapped to amino acid residues 1-70 and 270-320. In vivo studies demonstrate that HDAC3 and TR2 can form a complex on the TR2 DNA target and this complex exhibits histone deacetylase activity. These data identify two RIDs of HDAC3 and the biological activity of the complex formed by TR2 and HDAC3 on the TR2 DNA target.