Cytokines such as interferons (IFNs) activate signal transducers and activators of transcription (STATs) via phosphorylation. Histone deacetylases (HDACs) and the histone acetyltransferase (HAT) CBP dynamically regulate STAT1 acetylation. Here we show that acetylation of STAT1 counteracts IFN-induced STAT1 phosphorylation, nuclear translocation, DNA binding, and target gene expression. Biochemical and genetic experiments altering the HAT/HDAC activity ratio and STAT1 mutants reveal that a phospho-acetyl switch regulates STAT1 signaling via CBP, HDAC3, and the T-cell protein tyrosine phosphatase (TCP45). Strikingly, inhibition of STAT1 signaling via CBP-mediated acetylation is distinct from the functions of this HAT in transcriptional activation. STAT1 acetylation induces binding of TCP45, which catalyzes dephosphorylation and latency of STAT1. Our results provide a deeper understanding of the modulation of STAT1 activity. These findings reveal a new layer of physiologically relevant STAT1 regulation and suggest that a previously unidentified balance between phosphorylation and acetylation affects cytokine signaling.