Depudecin is a fungal metabolite that reverts the rounded phenotype of NIH 3T3 fibroblasts transformed with v-ras and v-src oncogenes to the flattened phenotype of the nontransformed parental cells. The mechanism of detransformation induced by this agent had not been determined. Here, we demonstrate that depudecin inhibits histone deacetylase (HDAC) activity effectively both in vivo and in vitro. Depudecin induces similar morphological reversion in v-ras transformed NIH 3T3 cells as do other naturally occurring HDAC inhibitors such as trichostatin A or trapoxin. It competitively inhibits the binding of [3H]trapoxin in vitro and the nuclear binding of a trapoxin-coumarin fluorophore in vivo, suggesting that depudecin shares a nuclear binding protein and site on that protein with trapoxin. Furthermore, depudecin induces hyperacetylation of histones in a dose-dependent manner and at concentrations comparable with that required for detransformation. An in vitro histone deacetylase assay, using purified recombinant HDAC1, reveals that depudecin inhibits 50% of the enzyme activity at a concentration of 4.7 microM. These results demonstrate that depudecin is a novel HDAC inhibitor and suggest that its ability to induce morphological reversion of transformed cells is the result of its HDAC inhibitory activity.