Gene expression in eukaryotes depends on epigenetic changes that occur on both histones and DNA. Class I histone deacetylases (HDACs) are enzymes that remove acetyl groups from histones and other nuclear proteins, thereby inducing chromatin condensation and transcriptional repression. HDACs belong to a large family of enzymes that undergo posttranslational modifications after the activation of several intracellular pathways. However, the environmental stimuli that change nuclear HDAC functions remain largely unknown. New evidence has demonstrated that the lipid sphingosine-1-phosphate (S1P) inhibits the activity of HDAC1 and HDAC2. Both S1P and sphingosine kinase 2 (SphK2), the enzyme that synthesizes S1P, are assembled in corepressor complexes containing HDAC1 and HDAC2. S1P is among the few endogenous HDAC inhibitors that is synthesized in the nucleus in response to extracellular stimulation, and the first nuclear lipid associated with an epigenetic modification. The discovery of endogenous molecules that regulate HDAC activity in vivo has implications for the development of new therapeutic approaches for a host of human diseases, including cancer and neurodegenerative disorders.