The BCL6 transcriptional repressor is required for the development of germinal center (GC) B cells and diffuse large B cell lymphomas (DLBCLs). Although BCL6 can recruit multiple corepressors, its transcriptional repression mechanism of action in normal and malignant B cells is unknown. We find that in B cells, BCL6 mostly functions through two independent mechanisms that are collectively essential to GC formation and DLBCL, both mediated through its N-terminal BTB domain. These are (1) the formation of a unique ternary BCOR-SMRT complex at promoters, with each corepressor binding to symmetrical sites on BCL6 homodimers linked to specific epigenetic chromatin features, and (2) the "toggling" of active enhancers to a poised but not erased conformation through SMRT-dependent H3K27 deacetylation, which is mediated by HDAC3 and opposed by p300 histone acetyltransferase. Dynamic toggling of enhancers provides a basis for B cells to undergo rapid transcriptional and phenotypic changes in response to signaling or environmental cues.