Histone deacetylases (HDACs) regulate gene expression by deacetylating histones and also modulate the acetylation of a number of nonhistone proteins, thus impinging on various cellular processes. Here, we analyzed the major class I enzymes HDAC1 and HDAC2 in primary mouse fibroblasts and in the B-cell lineage. Fibroblasts lacking both enzymes fail to proliferate in culture and exhibit a strong cell cycle block in the G1 phase that is associated with up-regulation of the CDK inhibitors p21 WAF1/CIP1 and p57 Kip2 and of the corresponding mRNAs. This regulation is direct, as in wild-type cells HDAC1 and HDAC2 are bound to the promoter regions of the p21 and p57 genes. Furthermore, analysis of the transcriptome and of histone modifications in mutant cells demonstrated that HDAC1 and HDAC2 have only partly overlapping roles. Next, we eliminated HDAC1 and HDAC2 in the B cells of conditionally targeted mice. We found that B-cell development strictly requires the presence of at least one of these enzymes: When both enzymes are ablated, B-cell development is blocked at an early stage, and the rare remaining pre-B cells show a block in G1 accompanied by the induction of apoptosis. In contrast, elimination of HDAC1 and HDAC2 in mature resting B cells has no negative impact, unless these cells are induced to proliferate. These results indicate that HDAC1 and HDAC2, by normally repressing the expression of p21 and p57, regulate the G1-to-S-phase transition of the cell cycle.