CD40 plays an important role in mediating inflammatory response and is mainly induced by JAK/STAT phosphorylation cascade. TNFalpha is the key cytokine that activates CD40 during inflammation and tumorigenesis. We have earlier shown that SMAR1 can repress the transcription of Cyclin D1 promoter by forming a HDAC1 dependent repressor complex. In this study, we show that SMAR1 regulates the transcription of NF-kappaB target gene CD40. SMAR1 recruits HDAC1 and forms a repressor complex on CD40 promoter and keeps its basal transcription in check. Further, we show that TNFalpha stimulation induces SMAR1 phosphorylation at Ser-347 and promotes its cytoplasmic translocation, thus releasing its negative effect. Concomitantly, TNFalpha induced phosphorylation of STAT1 at Tyr-701 by JAK1 facilitates its nuclear translocation and activation of CD40 through p300 recruitment and core Histone-3 acetylation. Thus, TNFalpha mediated regulation of CD40 expression occurs by dual phosphorylation of SMAR1 and STAT1.