Histone deacetylases (HDACs) form HDAC-associated complexes and play an essential role in transcriptional repression. The functional significance of HDAC-associated proteins in the progression of the cell cycle and in cell death remains to be established. Here, we investigated the molecular mechanisms by which methyl CpG-binding domain protein 3 (MBD3), a component of the HDAC complex, modulates these processes via its functional interplay with HDAC. Depletion of MBD3 induced an arrest at the G(2)/M transition and resulted in defective mitosis in cancer cells. These effects appear to be associated with the transcriptional modulation of key cell cycle-regulator genes, including CylinB1, Plk1, and Survivin. Chromatin immunoprecipitation analyses revealed that the transcription of these cell cycle regulators is modulated by MBD3, supporting its direct role in their transcriptional repression. These findings collectively support a role for MBD3 in cell cycle progression and cell death as a modulator of HDAC-mediated transcription.