Schizophrenia (SZ) is associated with GABA neuron dysfunction in the hippocampus, particularly the stratum oriens of sector CA3/2. A gene expression profile analysis of human postmortem hippocampal tissue followed by a network association analysis had shown a number of genes differentially regulated in SZ, including the epigenetic factors HDAC1 and DAXX. To characterize the contribution of these factors to the developmental perturbation hypothesized to underlie SZ, lentiviral vectors carrying short hairpin RNA interference (shRNAi) for HDAC1 and DAXX were used. In the hippocampal GABA neuron culture model, HiB5, transduction with HDAC1 shRNAi showed a 40% inhibition of HDAC1 mRNA and a 60% inhibition of HDAC1 protein. GAD67, a enzyme associated with GABA synthesis, was increased twofold (mRNA); the protein showed a 35% increase. The expression of DAXX, a co-repressor of HDAC1, was not influenced by HDAC1 inhibition. Transduction of HiB5 cells with DAXX shRNAi resulted in a 30% inhibition of DAXX mRNA that translated into a 90% inhibition of DAXX protein. GAD1 mRNA was upregulated fourfold, while its protein increased by ~30%. HDAC1 expression was not altered by inhibition of DAXX. However, a physical interaction between HDAC1 and DAXX was demonstrated by co-immunoprecipitation. Inhibition of HDAC1 or DAXX increased expression of egr-1, transcription factor that had previously been shown to regulate the GAD67 promoter. Our in vitro results point to a key role of both HDAC1 and DAXX in the regulation of GAD67 in GABAergic HiB5 cells, strongly suggesting that these epigenetic/transcription factors contribute to mechanisms underlying GABA cell dysfunction in SZ.