The dynamic assembly and remodelling of eukaryotic chromosomes facilitate fundamental cellular processes such as DNA replication and gene transcription. The repeating unit of eukaryotic chromosomes is the nucleosome core, consisting of DNA wound about a defined octamer of histone proteins. Two enzymatic processes that regulate transcription by targeting elements of the nucleosome include ATP-dependent nucleosome remodelling and reversible histone acetylation. The histone deacetylases, however, are unable to deacetylate oligonucleosomal histones in vitro. The protein complexes that mediate ATP-dependent nucleosome remodelling and histone acetylation/deacetylation in the regulation of transcription were considered to be different, although it has recently been suggested that these activities might be coupled. We report here the identification and functional characterization of a novel ATP-dependent nucleosome remodelling activity that is part of an endogenous human histone deacetylase complex. This activity is derived from the CHD3 and CHD4 proteins which contain helicase/ATPase domains found in SWI2-related chromatin remodelling factors, and facilitates the deacetylation of oligonucleosomal histones in vitro. We refer to this complex as the nucleosome remodelling and deacetylating (NRD) complex. Our results establish a physical and functional link between the distinct chromatin-modifying activities of histone deacetylases and nucleosome remodelling proteins.