Histone deacetylation plays a central role in the regulation of genes linked to virtually all biological processes. This modification reaction is dependent on a family of related histone deacetylases (HDACs), which function as key components of large multiprotein complexes involved in the development of normal and neoplastic cells. The mechanisms regulating HDACs and their roles in such processes are not understood, and these form the major focus for the current study. Here, in the course of assessing possible post-translational modifications of HDAC1, we demonstrated that HDAC1 is a substrate for SUMO-1 (small ubiquitin-related modifier) modification in vitro and in vivo. The HDAC1 lysines targeted for modification were identified as C-terminal Lys-444 and Lys-476, which are also present in mammalian HDAC2 and lower vertebrate HDAC1/2 orthologs yet absent from other HDAC family members, pointing to a means of differential regulation among HDAC proteins. Mutation of these target residues (lysine to arginine substitution) profoundly reduced HDAC1-mediated transcriptional repression in reporter assays without affecting HDAC1 ability to associate with mSin3A and eliminated HDAC1-induced cell cycle and apoptotic responses upon overexpression. Together, the results demonstrate that HDAC1 is modified by SUMO-1, and this modification can dramatically affect HDAC1 activity in a number of surrogate biological assays.