SFMBT1 (Scm [Sex comb on midleg] with four MBT [malignant brain tumor] domains 1) is a poorly characterized mammalian MBT domain-containing protein homologous to Drosophila SFMBT, a Polycomb group protein involved in epigenetic regulation of gene expression. Here, we show that SFMBT1 regulates transcription in somatic cells and during spermatogenesis through the formation of a stable complex with LSD1 and CoREST. When bound to its gene targets, SFMBT1 recruits its associated proteins and causes chromatin compaction and transcriptional repression. SFMBT1, LSD1, and CoREST share a large fraction of target genes, including those encoding replication-dependent histones. Simultaneous occupancy of histone genes by SFMBT1, LSD1, and CoREST is regulated during the cell cycle and correlates with the loss of RNA polymerase II at these promoters during G2, M, and G1. The interplay between the repressive SFMBT1-LSD1-CoREST complex and RNA polymerase II contributes to the timely transcriptional regulation of histone genes in human cells. SFMBT1, LSD1, and CoREST also form a stable complex in germ cells, and their chromatin binding activity is regulated during spermatogenesis.