Histone deacetylases (HDACs) negatively regulate gene expression by removing acetyl groups from lysine residues present in histones and other proteins. Histone deacetylase 3 is unique among the Class I family of HDACs, as it is able to shuttle between the nucleus and the cytoplasm, whereas the other family members remain in the nucleus. Histone deacetylase 3 often forms complexes with corepressor proteins that do not associate with the other Class I HDACs, and its phosphorylation correlates with increased enzymatic activity. Here we show that HDAC3 also localizes to the plasma membrane in multiple cell types. Furthermore, c-Src is shown to form a complex with HDAC3 at the plasma membrane and to use HDAC3 as a substrate for phosphorylation. Our results describe a novel localization and binding partner for the HDAC3 protein, as well as implicate c-Src in HDAC3 regulation.