Chicken ovalbumin upstream promoter-transcription factor (COUP-TF) is an orphan nuclear receptor that represses transcription of many genes. In adenovirus type 12 (Ad12) transformed cells, a high level of binding activity of COUP-TF to the major histocompatibility complex (MHC) class I enhancer correlates with the down-regulation of class I transcription, which, in turn, contributes to tumorigenesis. The mechanism by which COUP-TF represses transcription has yet to be elucidated. Here we show that COUP-TF represses transcription through its association with histone deacetylase. This was demonstrated using reciprocal binding assays that determined that the interaction between COUP-TF and histone deacetylase requires the COUP-TF C-terminal repression domain. Moreover, a histone deacetylase enzymatic activity was found to be associated with COUP-TF in Ad12-transformed cells. Transfection experiments further revealed that exogenous histone deacetylase facilitates transcriptional repression by COUP-TF. Also, supershift assays suggest that the transcriptional corepressor N-CoR, which is known to associate with histone deacetylases, is a part of the COUP-TF complex bound to the MHC class I enhancer R2 site. Finally, we provide evidence that inhibition of histone deacetylases relieves the repression of MHC class I expression in Ad12-transformed cells. Taken together these results support the notion that deacetylation of histones, mediated through COUP-TF, serves to down-regulate MHC class I transcription in Ad12-transformed cells.