Transcriptional activation is associated commonly with recruitment of histone acetylases, while repression involves histone deacetylases (HDACs). Here, we provide evidence to suggest that STAT5 activates gene expression by recruiting HDAC. The interleukin‐3 (IL‐3)‐dependent expression of the Id‐1 gene, encoding a helix–loop–helix (HLH) transcriptional inhibitor, is activated by both C/EBPβ and STAT5 transcription factors bound to its pro‐B‐cell enhancer (PBE), but is inhibited by HDAC inhibitors in Ba/F3 cells. STAT5 interacts with HDAC1 in the PBE region, resulting in deacetylation of histones, as well as C/EBPβ, whose acetylation diminishes its DNA‐binding activity. Consistently, expression of an acetylation‐resistant mutant of C/EBPβ results in IL‐3‐independent expression of the Id‐1 gene. Thus, we propose a novel mechanism by which STAT5 mediates the deacetylation of C/EBPβ, allowing transcriptional activation.