Repressor element 1 (RE1)-silencing transcription factor (REST)/neuron-restrictive silencer factor (NRSF) can repress several terminal neuronal differentiation genes by binding to a specific DNA sequence (RE1/neuron-restrictive silencer element [NRSE]) present in their regulatory regions. REST-VP16 binds to the same RE1/NRSE, but activates these REST/NRSF target genes. However, it is unclear whether REST-VP16 expression is sufficient to cause formation of functional neurons either from neural stem cells or from heterologous stem cells. Here we show that the expression of REST-VP16 in myoblasts grown under muscle differentiation conditions blocked entry into the muscle differentiation pathway, countered endogenous REST/NRSF-dependent repression, activated the REST/NRSF target genes, and, surprisingly, activated other neuronal differentiation genes and converted the myoblasts to a physiologically active neuronal phenotype. Furthermore, in vitro differentiated neurons produced by REST-VP16-expressing myoblasts, when injected into mouse brain, survived, incorporated into the normal brain, and did not form tumors. This is the first instance in which myoblasts were converted to a neuronal phenotype. Our results suggest that direct activation of REST/NRSF target genes with a single transgene, REST-VP16, is sufficient to activate other terminal neuronal differentiation genes and to override the muscle differentiation pathways, and they suggest that this approach provides an efficient way of triggering neuronal differentiation in myoblasts and possibly other stem cells.