Huntingtin protein is mutated in Huntington disease. We previously reported that wild-type but not mutant huntingtin stimulates transcription of the gene encoding brain-derived neurotrophic factor (BDNF; ref. 2). Here we show that the neuron restrictive silencer element (NRSE) is the target of wild-type huntingtin activity on BDNF promoter II. Wild-type huntingtin inhibits the silencing activity of NRSE, increasing transcription of BDNF. We show that this effect occurs through cytoplasmic sequestering of repressor element-1 transcription factor/neuron restrictive silencer factor (REST/NRSF), the transcription factor that binds to NRSE. In contrast, aberrant accumulation of REST/NRSF in the nucleus is present in Huntington disease. We show that wild-type huntingtin coimmunoprecipitates with REST/NRSF and that less immunoprecipitated material is found in brain tissue with Huntington disease. We also report that wild-type huntingtin acts as a positive transcriptional regulator for other NRSE-containing genes involved in the maintenance of the neuronal phenotype. Consistently, loss of expression of NRSE-controlled neuronal genes is shown in cells, mice and human brain with Huntington disease. We conclude that wild-type huntingtin acts in the cytoplasm of neurons to regulate the availability of REST/NRSF to its nuclear NRSE-binding site and that this control is lost in the pathology of Huntington disease. These data identify a new mechanism by which mutation of huntingtin causes loss of transcription of neuronal genes.