Deacetylation of histones is carried out by a corepressor complex in which Sin3A is an essential scaffold protein. Two proteins in this complex, the Sin3A-associated proteins SAP30L and SAP30, have previously been suggested to function as linker molecules between various corepressors. In this report, we demonstrate new functions for human SAP30L and SAP30 by showing that they can associate directly with core histones as well as naked DNA. A zinc-coordinating structure is necessary for DNA binding, one consequence of which is bending of the DNA. We provide evidence that a sequence motif previously shown to be a nuclear localization signal is also a phosphatidylinositol (PI)-binding element and that binding of specific nuclear monophosphoinositides regulates DNA binding and chromatin association of SAP30L. PI binding also decreases the repression activity of SAP30L and affects its translocation from the nucleus to the cytoplasm. Our results suggest that SAP30L and SAP30 play active roles in recruitment of deacetylating enzymes to nucleosomes, and mediate key protein-protein and protein-DNA interactions involved in chromatin remodeling and transcription.