Although the retinoblastoma protein (Rb) functions as a checkpoint in the cell cycle, it also regulates differentiation. It has recently been shown that Rb is acetylated during differentiation; however, the role of this modification has not been identified. Depletion of Rb levels with short hairpin RNA resulted in inhibition of human keratinocyte differentiation, delayed cell cycle exit and allowed cell cycle re-entry. Restoration of Rb levels rescued defects in differentiation and cell cycle exit and re-entry; however, re-expression of Rb with the major acetylation sites mutated did not. During keratinocyte differentiation, acetylation of Rb is mediated by PCAF and it is further shown that PCAF acetyltransferase activity is also required for normal differentiation. The major acetylation sites in Rb are located within the nuclear localization sequence and, although mutation did not alter Rb localization in cycling cells, the mutant is mislocalized to the cytoplasm during differentiation. Studies indicate that acetylation is a mechanism for controlling Rb localization in human keratinocytes, with either reduction of the PCAF or exogenous expression of the deacetylase SIRT1, resulting in mislocalization of Rb. These findings identify PCAF-mediated acetylation of Rb as an event required to retain Rb within the nucleus during keratinocyte differentiation.