The core CoREST complex (LHC) contains histone deacetylase HDAC1 and histone demethylase LSD1 held together by the scaffold protein CoREST. Here we analyze the purified LHC with modified peptide and reconstituted semisynthetic mononucleosome substrates. LHC demethylase activity toward methyl-Lys4 in histone H3 is strongly inhibited by H3 Lys14 acetylation, and this appears to be an intrinsic property of the LSD1 subunit. Moreover, the deacetylase selectivity of LHC unexpectedly shows a marked preference for H3 acetyl-Lys9 versus acetyl-Lys14 in nucleosome substrates but this selectivity is lost with isolated acetyl-Lys H3 protein. This diminished activity of LHC for Lys14 deacetylation in nucleosomes is not merely due to steric accessibility based on the pattern of sensitivity of the LHC enzymatic complex to hydroxamic acid-mediated inhibition. Overall, these studies have revealed how a single Lys modification can confer a composite of resistance in chromatin to a key epigenetic enzyme complex involved in gene silencing.