Histone deacetylase 1 and 2 (HDAC1/2) regulate chromatin structure as the catalytic core of the Sin3A, NuRD and CoREST co-repressor complexes. To better understand the key pathways regulated by HDAC1/2 in the adaptive immune system and inform their exploitation as drug targets, we have generated mice with a T-cell specific deletion. Loss of either HDAC1 or HDAC2 alone has little effect, while dual inactivation results in a 5-fold reduction in thymocyte cellularity, accompanied by developmental arrest at the double-negative to double-positive transition. Transcriptome analysis revealed 892 misregulated genes in Hdac1/2 knock-out thymocytes, including down-regulation of LAT, Themis and Itk, key components of the T-cell receptor (TCR) signaling pathway. Down-regulation of these genes suggests a model in which HDAC1/2 deficiency results in defective propagation of TCR signaling, thus blocking development. Furthermore, mice with reduced HDAC1/2 activity (Hdac1 deleted and a single Hdac2 allele) develop a lethal pathology by 3-months of age, caused by neoplastic transformation of immature T cells in the thymus. Tumor cells become aneuploid, express increased levels of c-Myc and show elevated levels of the DNA damage marker, γH2AX. These data demonstrate a crucial role for HDAC1/2 in T-cell development and the maintenance of genomic stability.