Although histone deacetylase (HDAC) inhibitors are appreciated as a promising class of anticancer drugs, recent reports show that P-glycoprotein (P-gp) is induced by HDAC inhibitor treatment in cancer cells, resulting in multidrug resistance of cancer cells to other chemotherapeutic agents. In this study, we investigated the molecular mechanism of HDAC inhibitor induction of P-gp expression. HDAC inhibitor treatment causes cell type-specific induction of P-gp expression without changes in the CpG methylation status of the promoter region. In addition, our data show that HDAC inhibitor does not alter the DNA binding activity of Sp1 but facilitates both the recruitment of a coactivator complex that includes CAAT/enhancer binding protein beta and pCAF and the dissociation of the repressive complex, HDAC1, to the Sp1 binding region. Subsequently, the hyperacetylated histone H3 becomes enriched in the promoter region, leading to RNA polymerase II recruitment to activate P-gp gene transcription. Furthermore, specific down-regulation of HDAC1, but not HDAC2, by RNA silencing was enough to induce P-gp expression in HeLa cells, strongly supporting the essential role of HDAC1 in HDAC inhibitor induction of P-gp. Concomitantly, cell type-specific induction of P-gp expression seems to be dependent on phosphatidylinositol 3-kinase activity. Taken together, our findings show that HDAC inhibitor treatment leads to an increase in P-gp expression through dynamic changes in chromatin structure and transcription factor association within the promoter region.