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Histone deacetylase (HDAC) inhibitors are emerging as an exciting new class of potential anticancer agents for the treatment of solid and hematological malignancies. In recent years, an increasing number of structurally diverse HDAC inhibitors have been identified that inhibit proliferation and induce differentiation and/or apoptosis of tumor cells in culture and in animal models. HDAC inhibition causes acetylated nuclear histones to accumulate in both tumor and normal tissues, providing a surrogate marker for the biological activity of HDAC inhibitors in vivo. The effects of HDAC inhibitors on gene expression are highly selective, leading to transcriptional activation of certain genes such as the cyclin-dependent kinase inhibitor p21WAF1/CIP1 but repression of others. HDAC inhibition not only results in acetylation of histones but also transcription factors such as p53, GATA-1 and estrogen receptor-α. The functional significance of acetylation of non-histone proteins and the precise mechanisms whereby HDAC inhibitors induce tumor cell growth arrest, differentiation and/or apoptosis are currently the focus of intensive research. Several HDAC inhibitors have shown impressive antitumor activity in vivo with remarkably little toxicity in preclinical studies and are currently in phase I clinical trial. The focus of this review is the development and clinical application of HDAC inhibitors for the treatment of cancer.