Yeast Sir2 is a heterochromatin component that silences transcription at silent mating loci, telomeres and the ribosomal DNA, and that also suppresses recombination in the rDNA and extends replicative life span. Mutational studies indicate that lysine 16 in the amino-terminal tail of histone H4 and lysines 9, 14 and 18 in H3 are critically important in silencing, whereas lysines 5, 8 and 12 of H4 have more redundant functions. Lysines 9 and 14 of histone H3 and lysines 5, 8 and 16 of H4 are acetylated in active chromatin and hypoacetylated in silenced chromatin, and overexpression of Sir2 promotes global deacetylation of histones, indicating that Sir2 may be a histone deacetylase. Deacetylation of lysine 16 of H4 is necessary for binding the silencing protein, Sir3. Here we show that yeast and mouse Sir2 proteins are nicotinamide adenine dinucleotide (NAD)-dependent histone deacetylases, which deacetylate lysines 9 and 14 of H3 and specifically lysine 16 of H4. Our analysis of two SIR2 mutations supports the idea that this deacetylase activity accounts for silencing, recombination suppression and extension of life span in vivo. These findings provide a molecular framework of NAD-dependent histone deacetylation that connects metabolism, genomic silencing and ageing in yeast and, perhaps, in higher eukaryotes.