Although differentiated cells normally retain cell-type-specific gene expression patterns throughout their lifetime, cell identity can sometimes be modified or reversed in vivo by transdifferentiation, or experimentally through cell fusion or by nuclear transfer. To examine the epigenetic changes that are required for the dominant conversion of lymphocytes to muscle, we generated heterokaryons between human B lymphocytes and mouse C2C12 myotubes. We show that within 2 days of heterokaryon formation lymphocyte nuclei adopt an architecture resembling that of muscle and then initiate the expression of muscle-specific genes in the same temporal order as developing muscle. The establishment of this muscle-specific program is coordinated with the shutdown of several lymphocyte-associated genes. Interestingly, erasing lymphocyte identity in reprogrammed cells requires histone deacetylase (HDAC) activity. Inhibition of HDAC activity during reprogramming selectively blocks the silencing of lymphocyte-specific genes but does not prevent the establishment of muscle-specific gene expression. Successful reprogramming is therefore shown to be a multi-step process in which the acquisition and extinction of lineage-specific gene programs are separable events.