This is the first report that L(3)mbt-like 2 (L3MBTL2) specifically interacts with the histone deacetylase domain of histone deacetylase 3 (HDAC3) via its MBT domain. Here, we show that L3MBTL2 selectively interacts with HDAC3, but not other class I HDACs. An in vitro peptide-binding assay demonstrated the specific association of HDAC3 with methylated histone-K20 tail and L3MBTL2. Furthermore, depletion of HDAC3 resulted in a decrease of methylated K20-H4, as well as an increase in acetylated histone H3. Consequently, HDAC3 knock-down selectively suppressed L3MBTL2-mediated transcriptional repression. Taken together, our results reveal the concerted action of both HDAC3 and L3MBTL2 in histone deacetylation and methylation-dependent transcriptional repression.