Histones and transcription factors are regulated by a number of post-translational modifications that in turn regulate the transcriptional activity of genes. These modifications occur in large, multisubunit complexes. We have reported previously that mSin3A can recruit O-GlcNAc transferase (OGT) along with histone deacetylase into such a corepressor complex. This physical association allows OGT to act cooperatively with histone deacetylation in gene repression by catalyzing the O-GlcNAc modification on specific transcription factors to inhibit their activity. For rapid, reversible gene regulation, the enzymes responsible for the converse reactions must be present. Here, we report that O-GlcNAcase, which is responsible for the removal of O-GlcNAc additions on nuclear and cytosolic proteins, possesses intrinsic histone acetyltransferase (HAT) activity in vitro. Free as well as reconstituted nucleosomal histones are substrates of this bifunctional enzyme. This protein, now termed NCOAT (nuclear cytoplasmic O-GlcNAcase and acetyltransferase) has a typical HAT domain that has both active and inactive states. This finding demonstrates that NCOAT may be regulated to reduce the state of glycosylation of transcriptional activators while increasing the acetylation of histones to allow for the concerted activation of eukaryotic gene transcription.