Treatment of mammalian cells with small molecule histone deacetylase (HDAC) inhibitors induces changes in the transcription of specific genes. These changes correlate directly with an increase in the acetylation levels of all four core histones in vivo. Antibodies directed against endogenous HDAC1, HDAC2, or HDAC3 immunoprecipitate histone deacetylase activity that is inhibited in vitro by the small molecule trapoxin (TPX), and all three HDACs are retained by a TPX-affinity matrix. HDAC1 and HDAC2 are associated in HeLa cells in a complex that is predominantly separate from an HDAC3 immune complex. Both Jurkat HDAC1 and HeLa HDAC1/2 immune complexes deacetylate all four core histones and recombinant HDAC1 deacetylates free and nucleosomal histones in vitro. Purified recombinant HDAC1 deacetylates core histones in the absence of protein cofactors. Site-directed mutagenesis was used to identify residues required for the enzymatic and structural integrity of HDAC1. Mutation of any one of four conserved residues causes deleterious effects on deacetylase activity and a reduced ability to bind a TPX-affinity matrix. A subset of these mutations also cause a decreased interaction with the HDAC1-associated proteins RbAp48 and mSin3A. Disruption of histone deacetylase activity either by TPX or by direct mutation of a histidine presumed to be in the active site abrogates HDAC1-mediated transcriptional repression of a targeted reporter gene in vivo.