Post-translational modifications of histones, in general, and acetylation/deacetylation, in particular, can dramatically alter gene expression in eukaryotic cells. In humans, four highly homologous class I HDAC enzymes (HDAC1, HDAC2, HDAC3, and HDAC8) have been identified to date. Although HDAC3 shares some structural and functional similarities with other class I HDACs, it exists in multisubunit complexes separate and different from other known HDAC complexes, implying that individual HDACs might function in a distinct manner. In this current study, to understand further the cellular function of HDAC3 and to uncover possible unique roles this protein may have in gene regulation, we performed a detailed analysis of HDAC3 using deletion mutations. Surprisingly, we found that the non-conserved C-terminal region of HDAC3 is required for both deacetylase and transcriptional repression activity. In addition, we discovered that the central portion of the HDAC3 protein possesses a nuclear export signal, whereas the C-terminal part of HDAC3 contributes to the protein's localization in the nucleus. Finally, we found that HDAC3 forms oligomers in vitro and in vivo and that the N-terminal portion of HDAC3 is necessary for this property. These data indicate that HDAC3 comprises separate, non-overlapping domains that contribute to the unique properties and function of this protein.