Histone deacetylase (HDAC) inhibitors reactivate tumor suppressor gene transcription; induce cancer cell differentiation, growth arrest, and programmed cell death; and are among the most promising new classes of anticancer drugs. Myc oncoproteins can block cell differentiation and promote cell proliferation and malignant transformation, in some cases by modulating target gene transcription. Here, we show that tissue transglutaminase (TG2) was commonly reactivated by HDAC inhibitors in neuroblastoma and breast cancer cells but not normal cells and contributed to HDAC inhibitor-induced growth arrest. TG2 was the gene most significantly repressed by N-Myc in neuroblastoma cells in a cDNA microarray analysis and was commonly repressed by N-Myc in neuroblastoma cells and c-Myc in breast cancer cells. Repression of TG2 expression by N-Myc in neuroblastoma cells was necessary for the inhibitory effect of N-Myc on neuroblastoma cell differentiation. Dual step cross-linking chromatin immunoprecipitation and protein coimmunoprecipitation assays showed that N-Myc acted as a transrepressor by recruiting the HDAC1 protein to an Sp1-binding site in the TG2 core promoter in a manner distinct from it's action as a transactivator at E-Box binding sites. HDAC inhibitor treatment blocked the N-Myc-mediated HDAC1 recruitment and TG2 repression in vitro. In neuroblastoma-bearing N-Myc transgenic mice, HDAC inhibitor treatment induced TG2 expression and demonstrated marked antitumor activity in vivo. Taken together, our data indicate the critical roles of HDAC1 and TG2 in Myc-induced oncogenesis and have significant implications for the use of HDAC inhibitor therapy in Myc-driven oncogenesis.