The class I histone deacetylases (HDACs) HDAC1 and HDAC2 play partially redundant roles in the regulation of gene expression and mouse development. As part of multisubunit corepressor complexes, these two deacetylases exhibit both enzymatic and nonenzymatic functions. To examine the impact of the catalytic activities of HDAC1 and HDAC2, we generated knock-in mice expressing catalytically inactive isoforms, which are still incorporated into the HDAC1/HDAC2 corepressor complexes. Surprisingly, heterozygous mice expressing catalytically inactive HDAC2 die within a few hours after birth, while heterozygous HDAC1 mutant mice are indistinguishable from wild-type littermates. Heterozygous HDAC2 mutant mice show an unaltered composition but reduced associated deacetylase activity of corepressor complexes and exhibit a more severe phenotype than HDAC2-null mice. They display changes in brain architecture accompanied by premature expression of the key regulator protein kinase C delta. Our study reveals a dominant negative effect of catalytically inactive HDAC2 on specific corepressor complexes resulting in histone hyperacetylation, transcriptional derepression, and, ultimately, perinatal lethality.