A balance of histone acetylation and deacetylation governs the regulation of genes that are involved in the differentiation and stratification of the mammalian epidermis. Class II HDACs (HDAC4, 5, 6, 7, 9, 10) frequently undergo nucleocytoplasmic flux resulting in gene derepression. Of the Class I HDACs (HDAC1, 2, 3, 8), HDAC2 has only been described in a nuclear setting. Here we report that a specific in vivo subpopulation of epidermal keratinocytes undergoing apoptotic-like terminal differentiation demonstrate complete cytoplasmic sequestration of HDAC2, robust Keratin-10 expression, and canonical nuclear fragmentation. Paralleling our in vivo findings, proteosomal degradation of total cellular HDAC2 enhanced Keratin-10 expression in undifferentiated HFK cells. Forced HDAC2 nuclear overexpression and retention results in a partial differentiation block as measured by reduced Keratin-10 expression and delayed chromatin fragmentation. We offer a preliminary model whereby cytoplasmic sequestration of the HDAC2 transcriptional corepressor contributes, in part, to the process of mammalian epidermal differentiation. (words 150)