Epigenetic deregulation contributes to diseases including cancer, neurodegeneration, osteodystrophy, cardiovascular defects, and obesity. For this reason, several inhibitors for histone deacetylases (HDACs) are being validated as novel anti-cancer drugs in clinical studies and display important anti-proliferative activities. While most inhibitors act on both class I, II, and IV HDACs, evidence is accumulating that class I is directly involved in regulation of cell growth and death, whereas class II members regulate differentiation processes, such as muscle and neuronal differentiation. Here, we show that the novel class II-selective inhibitor MC1568 interferes with the RAR- and peroxisome proliferator-activated receptor gamma (PPAR gamma)-mediated differentiation-inducing signaling pathways. In F9 cells, this inhibitor specifically blocks endodermal differentiation despite not affecting retinoic acid-induced maturation of promyelocytic NB4 cells. In 3T3-L1 cells, MC1568 attenuates PPAR gamma-induced adipogenesis, while the class I-selective MS275 blocked adipogenesis completely thus revealing a different mode of action and/or target profile of the two classes of HDACs. Using in vivo reporting PPRE-Luc mice, we find that MC1568 impairs PPARg signaling mostly in the heart and adipose tissues. These results illustrate how HDAC functions can be dissected by selective inhibitors