The terminal differentiation of neuronal and pancreatic beta-cells requires the specific expression of genes that are targets of an important transcriptional repressor named RE-1 silencing transcription factor (REST). The molecular mechanism by which these REST target genes are expressed only in neuronal and beta-cells and are repressed by REST in other tissues is a central issue in differentiation program of neuronal and beta-cells. Herein, we showed that the transcriptional factor Sp1 was required for expression of most REST target genes both in insulin-secreting cells and neuronal-like cells where REST is absent. Inhibition of REST in a non-beta and a non-neuronal cell model restored the transcriptional activity of Sp1. This activity was also restored by trichostatin A indicating the requirement of histone deacetylases for the REST-mediated silencing of Sp1. Conversely, exogenous introduction of REST blocked Sp1-mediated transcriptional activity. The REST inhibitory effect was mediated through its C-terminal repressor domain, which could interact with Sp1. Taken together, these data show that the inhibition of Sp1 by REST is required for the silencing of its target genes expression in non-neuronal and in non-beta-cells. We conclude that the interplay between REST and Sp1 determines the cell-specific expression of REST target genes.