To determine the underlying mechanism of Foxp1/2/4-mediated transcriptional repression, a yeast two-hybrid screen was performed that identified p66beta, a transcriptional repressor and component of the NuRD chromatin-remodeling complex. We show that direct interactions between Foxp1/4 and p66beta are mediated by the CR2 domain within p66beta and the zinc finger/leucine zipper repression domain found in Foxp1/2/4. These direct interactions are functionally relevant as overexpression of p66beta in combination with Foxp factors cooperatively represses Foxp target gene expression, whereas loss of p66 and Foxp factors results in de-repression of endogenous Foxp target genes in lung epithelial cells. Moreover, the NuRD components HDAC1/2 associate in a macromolecular complex with Foxp proteins, and loss of expression or inhibition of HDAC1/2 activity leads to de-repression of Foxp target gene expression. Importantly, we show in vivo that Foxp1 and HDAC2 act cooperatively to regulate expression of the cytoprotective cytokine interleukin-6, which results in increased resistance to hyperoxic lung injury in Foxp1/HDAC2 compound mutant animals. These data reveal an important interaction between the Foxp transcription factors and the NuRD chromatin-remodeling complex that modulates transcriptional repression critical for the lung epithelial injury response.