The RE1-silencing transcription factor (REST, also known as NRSF) is a master repressor of neuronal gene expression and neuronal programmes in non-neuronal lineages. Recently, REST was identified as a human tumour suppressor in epithelial tissues, suggesting that its regulation may have important physiological and pathological consequences. However, the pathways controlling REST have yet to be elucidated. Here we show that REST is regulated by ubiquitin-mediated proteolysis, and use an RNA interference (RNAi) screen to identify a Skp1-Cul1-F-box protein complex containing the F-box protein beta-TRCP (SCF(beta-TRCP)) as an E3 ubiquitin ligase responsible for REST degradation. beta-TRCP binds and ubiquitinates REST and controls its stability through a conserved phospho-degron. During neural differentiation, REST is degraded in a beta-TRCP-dependent manner. beta-TRCP is required for proper neural differentiation only in the presence of REST, indicating that beta-TRCP facilitates this process through degradation of REST. Conversely, failure to degrade REST attenuates differentiation. Furthermore, we find that beta-TRCP overexpression, which is common in human epithelial cancers, causes oncogenic transformation of human mammary epithelial cells and that this pathogenic function requires REST degradation. Thus, REST is a key target in beta-TRCP-driven transformation and the beta-TRCP-REST axis is a new regulatory pathway controlling neurogenesis.