DNA damage triggers diverse cancers, particularly hepatocellular carcinoma (HCC), but the intrinsic link between DNA damage and tumorigenesis remains unclear. Because of its role as an epigenetic and transcriptional regulator, histone deacetylase 3 (HDAC3) is essential for DNA damage control and is often aberrantly expressed in human HCC. In this study, we used individual class I HDAC member-deficient mice to demonstrate that K9 in histone H3 (H3K9), which is the critical site for the assembly of DNA damage response complexes, is exclusively targeted by HDAC3. Ablation of HDAC3 disrupted the deacetylation and consequent trimethylation of H3K9 (H3K9me3), the first step in double-strand break repair, and led to the accumulation of damaged DNA. Simultaneously, hyperacetylated H3K9 (H3K9ac) served as a transcriptional activator and enhanced multiple signaling pathways to promote tumorigenesis. Together, these results show that HDAC3 targets the H3K9ac/H3K9me3 transition to serve as a critical regulator that controls both DNA damage repair and the transcription of many tumor-related genes. Moreover, these findings provide novel insights into the link between DNA damage and transcriptional reprogramming in tumorigenesis. SIGNIFICANCE: These findings show that HDAC3 exclusively regulates H3K9ac in response to DNA damage, and loss of HDAC3 activity shifts the balance from DNA damage control to protumorigenic transcriptional activity. ©2019 American Association for Cancer Research.