Negative regulation of transcription is an important strategy in establishing and maintaining cell-specific gene expression patterns. Many neuronal genes are subject to active transcriptional repression outside the nervous system to establish neuronal specificity. NRSF/REST has been demonstrated to regulate at least 30 genes and contribute to their neuronal targeting by repressing transcription outside the nervous system. Further, human genome database searches reveal that over 800 genes contain an NRSE. Here we report that NRSF recruits the histone methylase G9a to silence NRSF target genes in nonneuronal cells. We show that G9a generates a highly localized domain of dimethylated histone H3-K9 around NRSEs, but H3-K27 remains unmethylated. The NRSEs are also associated with HP1. Finally, we demonstrate that dominant-negative G9a abrogates silencing of chromosomal neuronal genes. These findings implicate a role for histone methylation in targeting neuronal gene expression to the nervous system.