Knirps and other short-range transcriptional repressors play critical roles in patterning the early Drosophila embryo. These repressors are known to bind the CtBP corepressor, but their mechanism of action is poorly understood. We purified functional recombinant Knirps protein from transgenic embryos to identify possible cofactors that contribute to this protein’s activity. The protein migrates in a complex of approximately 450 kDa, and was found to copurify with the Rpd3 histone deacetylase protein during a double affinity purification procedure. Association of Rpd3 with Knirps was dependent on the presence of the CtBP-dependent repression domain of Knirps. Previous studies of an rpd3 mutant had not shown defects in the pattern of expression of even-skipped, a target of the Knirps repressor. However, in embryos doubly heterozygous for knirps and rpd3, a marked increase in the frequency of defects in the Knirps-regulated posterior domain of even-skipped expression was found, indicating that Rpd3 contributes to Knirps repression activity in vivo. This finding implicates deacetylation in the mechanism of short-range repression in Drosophila.