Gene expression can be modulated by chromatin changes induced by histone acetylation and deacetylation. Acetylation of histone lysine residues by acetyltransferases is associated with transcriptionally active chromatin, whereas the removal of acetyl groups by histone deacetylases (HDACs) correlates with repressed chromatin. Recent evidence has shown that histone deacetylation is responsible for restricting neuronal gene expression, whereas histone acetylation is necessary for astrocytic differentiation We now asked whether histone acetylation or deacetylation was necessary for oligodendrocyte differentiation. Neonatal rat cortical progenitors were kept proliferating and undifferentiated in the presence of mitogens and induced to stop proliferating and differentiate into oligodendrocytes by mitogen removal. Histone deacetylation was observed during the temporal window between exit from the cell cycle and onset of differentiation, which was characterized by acquisition of branched morphology and myelin gene expression. Blocking HDAC activity during this critical window using the inhibitor trichostatin A (TSA) prevented the progression of progenitors into mature oligodendrocytes. TSA-treated progenitors were able to exit from the cell cycle but did not progress to oligodendrocytes. Their development was arrested at the progenitor stage, characterized by simple morphology and lack of myelin gene expression. The effect of TSA on progenitor differentiation was lineage specific, because TSA did not affect the ability of these cells to differentiate into type II astrocytes when cultured in the presence of serum. From these data, we conclude that histone deacetylation is a necessary component of the oligodendrocyte differentiation program.