Dynamic changes in histone acetylation play an essential role in the modifications of chromatin structure and regulation of gene expression in higher eukaryotes. These changes are modulated antagonistly by histone actyltransferases (HAT) and histone deacetylases (HDAC). HDACs, which catalyze the deacetylation of lysine residues in the histone N-terminal, are involved in many biological processes but their roles in rice innate immunity has not been well understood yet. In this study, we characterized the function of OsHDT701, one of the plant-specific HD2 subfamily of HDAC genes in rice (Oryza sativa). Transcription of OsHDT701 is increased in the compatible reaction while decreased in the incompatible reaction after the infection by the fungal pathogen Magnaporthe oryzae. Over-expression of OsHDT701 in transgenic rice leads to decreased levels of histone H4 acetylation and enhanced susceptibility to both rice pathogens M. oryzae and Xanthomonas oryzae pv. oryzae (Xoo). In contrary, silencing of OsHDT701 in transgenic rice causes elevated levels of histone H4 acetylation and transcription of pattern recognition receptor (PRR) and defense-related genes, which leads to increased reactive oxygen species (ROS) generation after PAMP elicitor treatment as well as enhanced resistance to M. oryzae and Xoo. Furthermore, we found that OsHDT701 can bind to defense-related genes to regulate their expression. Taken together, these results demonstrate that OsHDT701 negatively regulates innate immunity via modulating the levels of histone H4 acetylation of PPR and defense-related genes in rice.