The Runt domain transcription factor Runx2 (AML-3, and Cbfa1) is essential for osteoblast development, differentiation, and bone formation. Runx2 positively or negatively regulates osteoblast gene expression by interacting with a variety of transcription cofactor complexes. In this study, we identified a trichostatin A-sensitive autonomous repression domain in the amino terminus of Runx2. Using a candidate approach, we found that histone deacetylase (HDAC) 3 interacts with the amino terminus of Runx2. In transient transfection assays, HDAC3 repressed Runx2-mediated activation of the osteocalcin promoter. HDAC inhibitors and HDAC3-specific short hairpin RNAs reversed this repression. In vivo, Runx2 and HDAC3 associated with the osteocalcin promoter. These data indicate that HDAC3 regulates Runx2-mediated transcription of osteoblast genes. Suppression of HDAC3 in MC3T3 preosteoblasts by RNA interference accelerated the expression of Runx2 target genes, osteocalcin, osteopontin, and bone sialoprotein but did not significantly alter Runx2 levels. Matrix mineralization also occurred earlier in HDAC3-suppressed cells, but alkaline phosphatase expression was not affected. Thus, HDAC3 regulates osteoblast differentiation and bone formation. Although HDAC3 is likely to affect the activity of multiple proteins in osteoblasts, our data show that it actively regulates the transcriptional activity of the osteoblast master protein, Runx2.