HDAC1 and -2 are highly conserved enzymes and often coexist in the same coregulator complexes. Understanding the regulation of histone deacetylase activities is extremely important because these enzymes play key roles in epigenetic regulation in normal and cancer cells. We previously showed that HDAC1 is required for glucocorticoid receptor-mediated transcription activation and that its activity is regulated through acetylation by p300 during the induction cycle. Here, we showed that HDAC2 is also required for glucocorticoid receptor-mediated gene activation. HDAC2, however, is regulated through a different mechanism from that of HDAC1. HDAC2 is not acetylated by p300, although 5 of 6 acetylated lysine residues in HDAC1 are also present in HDAC2. More importantly, the activity of HDAC2 is inhibited by acetylated HDAC1. Additionally, we showed that acetylated HDAC1 can trans-regulate HDAC2 through heterodimerization. Thus, this study uncovered fundamental differences between HDAC1 and HDAC2. It also unveiled a new mechanism of collaborative regulation by HDAC1/2 containing coregulator complexes.