In eukaryotic cells, covalent modifications to core histones contribute to the establishment and maintenance of cellular phenotype via regulation of gene expression. Histone acetyltransferases (HATs) cooperate with histone deacetylases (HDACs) to establish and maintain specific patterns of histone acetylation. HDAC inhibitors can cause pluripotent stem cells to cease proliferating and enter terminal differentiation pathways in culture. To better define the roles of individual HDACs in stem cell differentiation, we have constructed "dominant-negative" stem cell lines expressing mutant, Flag-tagged HDACs with reduced enzymatic activity. Replacement of a single residue (His-->Ala) in the catalytic center reduced the activity of HDACs 1 and 2 by 80%, and abolished HDAC3 activity; the mutant HDACs were expressed at similar levels and in the same multiprotein complexes as wild-type HDACs. Hexamethylene bisacetamide-induced MEL cell differentiation was potentiated by the individual mutant HDACs, but only to 2%, versus 60% for an HDAC inhibitor, sodium butyrate, suggesting that inhibition of multiple HDACs is required for full potentiation. Cultured E14.5 cortical stem cells differentiate to neurons, astrocytes, and oligodendrocytes upon withdrawal of basic fibroblast growth factor. Transduction of stem cells with mutant HDACs 1, 2, or 3 shifted cell fate choice toward oligodendrocytes. Mutant HDAC2 also increased differentiation to astrocytes, while mutant HDAC1 reduced differentiation to neurons by 50%. These results indicate that HDAC activity inhibits differentiation to oligodendrocytes, and that HDAC2 activity specifically inhibits differentiation to astrocytes, while HDAC1 activity is required for differentiation to neurons.