TFII-I family proteins are characterized structurally by the presence of multiple reiterated I-repeats, each containing a putative helix-loop-helix domain. Functionally, they behave as multifunctional transcription factors that are activated by a variety of extracellular signals. In studying their subcellular localization, we noticed that these transcription factors frequently reside in subnuclear domains/dots. Because nuclear dots are believed often to harbor components of histone deacetylase enzymes (HDACs), we investigated whether TFII-I family proteins colocalize and interact with HDACs. Here, we show that TFII-I and its related member hMusTRD1/BEN physically and functionally interact with HDAC3. The TFII-I family proteins and HDAC3 also show nearly identical expression patterns in early mouse development. Consistent with our earlier observation that TFII-I family proteins also interact with PIASxbeta, a member of the E3 ligase family involved in the small ubiquitin-like modifier (SUMO) pathway, we show further that PIASxbeta physically and functionally interacts with HDAC3 and relieves the transcriptional repression exerted by HDAC3 upon TFII-I-mediated gene activation. These results suggest a complex interplay between two posttranslational pathways-histone modification and SUMOylation-brokered in part by TFII-I family proteins.