Histone deacetylase (HDAC) inhibitors induce cell cycle arrest, differentiation or apoptosis in tumour cells and are, therefore, promising anti-cancer reagents. However, the specific HDAC isoforms that mediate these effects are not yet identified. To explore the role of HDAC1 in tumourigenesis and tumour proliferation, we established an experimental teratoma model using wild-type and HDAC1-deficient embryonic stem cells. HDAC1-deficient teratomas showed no significant difference in size compared with wild-type teratomas. Surprisingly, loss of HDAC1 was not only linked to increased apoptosis, but also to significantly enhanced proliferation. Epithelial structures showed reduced differentiation as monitored by Oct3/4 expression and changed E-cadherin localization and displayed up-regulated expression of SNAIL1, a regulator of epithelial cell plasticity. Increased levels of the transcriptional regulator SNAIL1 are crucial for enhanced proliferation and reduced differentiation of HDAC1-deficient teratoma. Importantly, the analysis of human teratomas revealed a similar link between loss of HDAC1 and enhanced tumour malignancy. These findings reveal a novel role for HDAC1 in the control of tumour proliferation and identify HDAC1 as potential marker for benign teratomas.