Despite years of study focused on the tumor suppressor p53, little is understood about its functions in normal, differentiated cells. We found that p53 directly interacts with lysine-specific demethylase 1 (LSD1) to alter chromatin structure and confer developmental repression of the tumor marker alpha-fetoprotein (AFP). Chromatin immunoprecipitation (ChIP) and sequential ChIP of developmentally staged liver showed that p53 and LSD1 cooccupy a p53 response element, concomitant with dimethylated histone H3 lysine 4 (H3K4me2) demethylation and postnatal repression of AFP transcription. In p53-null mice, LSD1 binding is depleted, H3K4me2 is increased, and H3K9me2 remains unchanged compared to those of the wild type, underscoring the specificity of p53-LSD1 complexes in demethylation of H3K4me2. We performed partial hepatectomy of wild-type mouse liver and induced a regenerative response, which led to a loss of p53, increased H3K4me2, and decreased LSD1 interaction at AFP chromatin, in parallel with reactivation of AFP expression. In contrast, nuclear translocation of p53 in mouse embryonic fibroblasts led to p53 interaction with p21/CIP1 chromatin, without recruitment of LSD1, and to activation of p21/CIP1. These findings reveal that LSD1 is targeted to chromatin by p53, likely in a gene-specific manner, and define a molecular mechanism by which p53 mediates transcription repression in vivo during differentiation.