The role of protein kinase A in regulating transcription of the cholinergic gene locus, which contains both the vesicular acetylcholine transporter gene and the choline acetyltransferase gene, was investigated in PC12 cells and a protein kinase A-deficient PC12 mutant, A126.1B2, in which transcription of the gene is reduced. The site of action of protein kinase A was localized to a neuron-restrictive silencer element/repressor element 1 (NRSE/RE-1) sequence within the cholinergic gene. Neuron-restrictive silencer factor (NRSF)/RE-1-silencing transcription factor (REST), the transcription factor which binds to NRSE/RE-1, was expressed at similar levels in both PC12 and A126.1B2 cells. Although nuclear extracts containing NRSF/REST from A126.1B2 exhibited binding to NRSE/RE-1, nuclear extracts from PC12 cells did not. The NRSF/REST isoform REST4 was expressed in PC12 cells but not in A126,1B2, REST4 inhibited binding of NRSF/REST to NRSE/RE-1 as determined by gel mobility shift assays, Coimmunoprecipitation was used to demonstrate interaction between NRSF/REST and REST 1. Expression of recombinant REST4 in A126.1B2 was sufficient to transcriptionally activate the cholinergic gene locus. Thus, in PC12 cells, protein kinase A promotes the production of REST4, which inhibits repression of the cholinergic gene locus by NRSF/REST.