Cyclic AMP (cAMP) stimulates the expression of numerous genes via the protein kinase A (PKA)-mediated phosphorylation of CREB at Ser133. Ser133 phosphorylation, in turn, promotes recruitment of the coactivator CREB binding protein and its paralog p300, histone acetyltransferases (HATs) that have been proposed to mediate target gene activation, in part, by destabilizing promoter bound nucleosomes and thereby allowing assembly of the transcriptional apparatus. Here we show that although histone deacetylase (HDAC) inhibitors potentiate target gene activation via cAMP, they do not stimulate transcription over the early burst phase, during which CREB phosphorylation and CBP/p300 recruitment are maximal. Rather, HDAC inhibitors augment CREB activity during the late attenuation phase by prolonging CREB phosphorylation on chromosomal but, remarkably, not on extrachromosomal templates. In reconstitution studies, assembly of periodic nucleosomal arrays on a cAMP-responsive promoter template potently inhibited CREB phosphorylation by PKA, and acetylation of these template-bound nucleosomes by p300 partially rescued CREB phosphorylation by PKA. Our results suggest a novel regulatory mechanism by which cellular HATs and HDACs modulate the phosphorylation status of nuclear activators in response to cellular signals.