Huntington's disease (HD) is caused by a polyglutamine expansion within the huntingtin (Htt) protein. Both loss of function of normal Htt and gain of a toxic function by the polyglutamine-expanded mutant Htt protein have been proposed to be responsible for HD, although the molecular mechanisms involved are unclear. We show that Htt is a neuroprotective protein in both HD-related and unrelated model systems. Neuroprotection by Htt is mediated by its sequestration of histone deacetylase-3 (HDAC3), a protein known to promote neuronal death. In contrast to the normal Htt, mutant Htt interacts poorly with HDAC3. However, expression of mutant Htt liberates HDAC3 from Htt, thus de-repressing its neurotoxic activity. Indeed, mutant Htt neurotoxicity is inhibited by the knockdown of HDAC3 and markedly reduced in HDAC3-deficient neurons. A reduction in Htt-HDAC3 interaction is also seen in neurons exposed to other apoptotic stimuli and in the striatum of R6/2 HD mice. Our results suggest that the robust interaction between Htt and HDAC3 along with the ability of mutant Htt to disrupt this association while not itself interacting with HDAC3 provides an explanation for both the loss-of-function and gain-of-toxic-function mechanisms proposed for HD. Moreover, our results identify HDAC3 as an essential player in mutant Htt-induced neurodegeneration.