REST/NRSF is a transcriptional repressor that acts at the terminal stage of the neuronal differentiation pathway and blocks the transcription of several differentiation genes. REST/NRSF is generally downregulated during induction of neuronal differentiation. The recombinant transcription factor REST-VP16 binds to the same DNA binding site as does REST/NRSF but functions as an activator instead of a repressor and can directly activate the transcription of REST/NRSF target genes. However, it is not known whether REST-VP16 expression is sufficient to cause formation of functional neurons from neural stem cells (NSCs). Here we show that regulated expression of REST-VP16 in a physiologically relevant NSC line growing under cycling conditions converted the cells rapidly to the mature neuronal phenotype. Furthermore, when grown in the presence of retinoic acid, REST-VP16-expressing NSCs activated their target, as well as other differentiation genes that are not their direct target, converting them to the mature neuronal phenotype and enabling them to survive in the presence of mitotic inhibitors, which is a characteristic of mature neurons. In addition, these neuronal cells were physiologically active. These results showed that direct activation of REST/NRSF target genes in NSCs with a single transgene, REST-VP16, is sufficient to cause neuronal differentiation, and the findings suggested that direct activation of genes involved in the terminal stage of differentiation may cause neuronal differentiation of NSCs.