Histone deacetylase 3 (HDAC3) is an epigenome-modifying enzyme that is required for normal mouse development and tissue-specific functions. In vitro, HDAC3 protein itself has minimal enzyme activity but gains its histone-deacetylation function from stable association with the conserved deacetylase-activating domain (DAD) contained in nuclear receptor co-repressors NCOR1 and SMRT. Here we show that HDAC3 enzyme activity is undetectable in mice bearing point mutations in the DAD of both NCOR1 and SMRT (NS-DADm), despite having normal levels of HDAC3 protein. Local histone acetylation is increased, and genomic HDAC3 recruitment is reduced though not abrogated. Notably, NS-DADm mice are born and live to adulthood, whereas genetic deletion of HDAC3 is embryonic lethal. These findings demonstrate that nuclear receptor co-repressors are required for HDAC3 enzyme activity in vivo and suggest that a deacetylase-independent function of HDAC3 may be required for life.