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AnswerWhile SQL Server can run on a domain controller, it is not recommended if you are seeking the best performance. For best performance of SQL Server, the server should be dedicated to SQL Server, and not shared with other functions, such as a domain controller or a file server.
It is hard to tune servers that run multiple application, as different application may require mutually exclusive configurations. One example of this is SQL Server running on a file server. For best performance on Windows, the "Maximize data throughput for network applications" option should be selected in order for SQL Server to run optimally. But for file servers, the "Maximize data throughput for file sharing" should be selected for optimal performance. These two settings are mutually exclusive. So if you have a server that is running both SQL Server and acting as a file server, only one of the two can be optimized, and the other one will suffer performance.
Of course, if your SQL Server is not very busy, and you don't ever expect it to be, then sharing server resources can made sense. Only you can decide if compromising SQL Server's performance is the appropriate decision.
Another possible issue with running SQL Server on a domain controller is security. With both running on the same physical server, should one of them be compromised, then is is possible that it might be easier to compromise the other one also.
