Alcohol dehydrogenase 5 (ADH5) is a conserved enzyme for alcohol and aldehyde metabolism in mammals. Despite dynamic expression throughout neurogenesis, its role in neuronal development remains unknown. Here we present the first evidence that ADH5 is a negative regulator of neuronal differentiation. Gene expression analyses identify a constant reduction of ADH5 levels throughout neuronal development. Overexpression of ADH5 reduces both development and adult neuronal differentiation of mouse neurons. This effect depends on the catalytic activity of ADH5 and involves ADH5-mediated denitrosation of histone deacetylase 2 (HDAC2). Our results indicate that ADH5 counteracts neuronal differentiation of human neural stem cells and that this effect can be reversed by pharmacological inhibition of ADH5. Based on these observations, we propose that ADH5 is a novel suppressor of neuronal differentiation and maturation. Inhibition of ADH5 may improve adult neurogenesis in a physiological or pathological setting.