During embryogenesis, differentiation of skeletal muscle is regulated by transcription factors that include members of the Msx homeoprotein family. By investigating Msx1 function in repression of myogenic gene expression, we identified a physical interaction between Msx1 and H1b, a specific isoform of mouse histone H1. We found that Msx1 and H1b bind to a key regulatory element of MyoD, a central regulator of skeletal muscle differentiation, where they induce repressed chromatin. Moreover, Msx1 and H1b cooperate to inhibit muscle differentiation in cell culture and in Xenopus animal caps. Our findings define a previously unknown function for "linker" histones in gene-specific transcriptional regulation.