During muscle regeneration, the transcription factor Pax7 stimulates the differentiation of satellite cells (SCs) toward the muscle lineage but restricts adipogenesis. Here, we identify HDAC4 as a regulator of Pax7-dependent muscle regeneration. In HDAC4-deficient SCs, the expression of Pax7 and its target genes is reduced. We identify HDAC4-regulated Lix1 as a Pax7 target gene required for SC proliferation. HDAC4 inactivation leads to defective SC proliferation, muscle regeneration, and aberrant lipid accumulation. Further, expression of the brown adipose master regulator Prdm16 and its inhibitory microRNA-133 are also deregulated. Thus, HDAC4 is a novel regulator of Pax7-dependent SC proliferation and potentially fate determination in regenerating muscle.