A role of proinflammation has been implicated in the pathogenesis of diabetes, but the up-stream regulatory signals and molecular signatures are poorly understood. While histone modifications such as changes in histone deacetylase (HDAC) are emerging as novel epigenetic biomarkers, there is lack of studies to demonstrate their clinical relevance in diabetes. Therefore, we investigated the extent of HDAC machinery and inflammatory signals in peripheral blood mononuclear cells (PBMCs) from patients with type 2 diabetes mellitus (T2DM) compared to control subjects. HDAC3 activity was significantly (p < 0.05) increased in patients with T2DM compared to control subjects. While subtypes of HDACs were differentially expressed at their transcriptional levels in patients with type 2 diabetes, the most prominent observation is the significantly (p < 0.05) elevated messenger RNA (mRNA) levels of HDAC3. Expression levels of Sirt1 which represents the class III HDAC were decreased significantly in T2DM (p < 0.05). Plasma levels of both TNF-α and IL-6 were significantly higher (p < 0.05) in patients with type 2 diabetes compared to control subjects. Among the proinflammatory mediators, the mRNA expression of MCP-1, IL1-β, NFκB, TLR2, and TLR4 were also significantly (p < 0.05) increased in T2DM. Transcriptional levels of DBC1 (deleted in breast cancer 1, which is a negative regulator of HDAC3) were seen significantly reduced in PBMCs from T2DM. Interestingly, HDAC3 activity/HDAC3 mRNA levels positively correlated to proinflammation, poor glycemic control, and insulin resistance. Striking message from this study is that while looking for anti-inflammatory strategies and drugs with novel mode of action for T2DM, discovering and designing specific inhibitors targeted to HDAC3 appears promising.