RE-1 silencing transcription factor (REST) is a transcriptional repressor that represses neuronal gene transcription in non-neuronal cells. REST target genes are expressed in neurons and in neuroendocrine cells. Here, we show that treatment with the histone deacetylase inhibitor trichostatin A (TSA) or expression of a mutant of REST (DP-REST:ER) that contains a transcriptional activation domain enhanced expression of the REST target genes encoding synaptophysin and secretogranin II in neuronal as well as in neuroendocrine cells. These data indicate that the synaptophysin and secretogranin II genes are similarly regulated in neuronal and neuroendocrine cells. In contrast, expression of the connexin36 gene was inducible by TSA or DP-REST:ER only in pancreatic alpha and beta cells, but not in neuronal and pituitary cells, indicating that transcriptional repression by REST functions in a cell type-specific manner. Expression of the BDNF and GluR2 genes, both described as targets of REST, was not induced by either TSA or expression of DP-REST:ER in neuronal or neuroendocrine cells. Chromatin immunoprecipitation experiments using antibodies directed against methylated histone H3Lys4 or H3Lys9 showed a perfect correlation between expression of REST target genes in different cell types and nucleosomal modifications that distinguish active from inactive genes. We conclude that the cell type-specific microenvironment, in particular the cell type-specific structure of the chromatin, is crucial for the ability of REST to control gene transcription.