Transcription is regulated by a network of transcription factors and related cofactors that act in concert with the general transcription machinery. Elucidating their underlying interactions is important for understanding the mechanisms regulating transcription. Recently, we have shown that Krüppel-like factor KLF5, a member of the Sp/KLF family of zinc finger factors and a key regulator of cardiovascular remodeling, is regulated positively by the acetylase p300 and negatively by the oncogenic regulator SET through coupled interaction and regulation of acetylation. Here, we have shown that the deacetylase HDAC1 can negatively regulate KLF5 through direct interaction. KLF5 interacts with HDAC1 in the cell and in vitro. Gel shift DNA binding assay showed that their interaction inhibits the DNA binding activity of KLF5, suggesting a property of HDAC1 to directly affect the DNA binding affinity of a transcription factor. Reporter assay also revealed that HDAC1 suppresses KLF5-dependent promoter activation. Additionally, overexpression of HDAC1 suppressed KLF5-dependent activation of its endogenous downstream gene, platelet-derived growth factor-A chain gene, when activated by phorbol ester. Further, HDAC1 binds to the first zinc finger of KLF5, which is the same region where p300 interacts with KLF5 and, intriguingly, HDAC1 inhibits binding of p300 to KLF5. Direct competitive interaction between acetylase and deacetylase has been hitherto unknown. Collectively, the transcription factor KLF5 is negatively regulated by the deacetylase HDAC1 through direct effects on its activities (DNA binding activity, promoter activation) and further through inhibition of interaction with p300. These findings suggest a novel role and mechanism for regulation of transcription by deacetylase.