Histone deacetylation regulates gene expression during plant stress responses and is therefore an interesting target for epigenetic manipulation of stress sensitivity in plants. Unfortunately, overexpression of the core enzymes (histone deacetylases [HDACs]) has either been ineffective or has caused pleiotropic morphological abnormalities. In yeast and mammals, HDACs operate within multiprotein complexes. Searching for putative components of plant HDAC complexes, we identified a gene with partial homology to a functionally uncharacterized member of the yeast complex, which we called Histone Deacetylation Complex1 (HDC1). HDC1 is encoded by a single-copy gene in the genomes of model plants and crops and therefore presents an attractive target for biotechnology. Here, we present a functional characterization of HDC1 in Arabidopsis thaliana. We show that HDC1 is a ubiquitously expressed nuclear protein that interacts with at least two deacetylases (HDA6 and HDA19), promotes histone deacetylation, and attenuates derepression of genes under water stress. The fast-growing HDC1-overexpressing plants outperformed wild-type plants not only on well-watered soil but also when water supply was reduced. Our findings identify HDC1 as a rate-limiting component of the histone deacetylation machinery and as an attractive tool for increasing germination rate and biomass production of plants.