Histone deacetylases 1 and 2 (HDAC1/2) are highly similar proteins (83% identical) that form the core catalytic components of corepressor complexes that modulate gene expression. Germline deletion of Hdac1 in mice results in early embryonic lethality and conditional deletion of Hdac1 but not Hdac2 causes precocious differentiation in ES cells. Therefore to further investigate the role of HDAC1/2 during the early embryogenesis, we have generated a compound conditional knockout ES cell line Hdac1ko; Hdac2Het in which HDAC1/2 activity is reduced but not entirley lost. Hdac1ko; Hdac2He cells have a significant reduction in total deacetylase activity and disruption of corepressor complex integrity. The prolifration capicity of Hdac1ko; Hdac2He cells is not inhibited, however, upon differentiation they were predisposed to toward the cardiomyocyte lineage. In most cell types, deletion of both Hdac1 and Hdac2 is required to produce a phenotype, suggesting their activity is redundant. To circumvent this functional redundancy, we generated a double conditional knockout (DKO) cells in which both Hdac1 and Hdac2 can be inactivated simultaneously. Loss of HDAC1/2 results in a 60% reduction in total HDAC activity and a loss of cell viability, which is associated with increased abnormal mitotic spindle, chromatin bridges and miconuclei, suggesting that HDAC1/2 are necessary for accurate chromosome segregation. Transcriptome analysis reveals 1,708 differentially expressed genes in DKO cells including a reduction in the expression of the ES cells core pluripotent factors. HDAC1/2 activity can be regulated in vitro through the binding of inositol tetraphosphate (IP4). By rescuing the viability of DKO cells using wt and mutant forms of HDAC1, we demonstrated that mutations that abolish IP4 binding reduce the activity of HDAC1/2 in vivo. We have also shown that treatment of DKO ES cells with RA results in reduces induction of HOX genes, suggesting a positive role of HDAC1/2 in gene activation as well as gene repression.