PML-RARalpha is a chimeric transcription factor tightly associated with acute promyelocytic leukemia. PML-RARalpha plays an important role in the aberrant transcription repression on the target genes of wild-type retinoic acid receptors. Here, we demonstrated that HDAC3, one component of the N-CoR transcription repressor complex, is a key regulator of the transcription repression by PML-RARalphain vivo. Using immunoprecipitation, we demonstrated that PML-RARalpha interacts with N-CoR/HDAC3 in vivo without ligand. Next, using chromatin immunoprecipitation (ChIP) assay, this N-CoR/HDAC3 co-repressor complex was recruited to the endogenous target promoters (RARbeta and CYP26) through PML-RARalpha. The neighboring histones were de-acetylated and gene expression was repressed. When HDAC3 protein was knocked down by RNA interference in PML-RARalpha-expressing cells, the endogenous target genes were significantly activated, which was also confirmed by promoter-luciferase reporter assay. These results provide evidence to show that the N-CoR/HDAC3 co-repressor complex is involved in the aberrant transcription regulation in PML-RARalpha-expressing cells.