We have previously described a multiprotein complex termed the BHC or BRAF-HDAC complex, which is required for the repression of neuronal-specific genes. We have shown that the BHC complex is recruited by a neuronal silencer, REST (RE1-silencing transcription factor), and mediates the repression of REST-responsive genes. BHC is a multiprotein complex consisting of two enzymatic activities: a histone deacetylase (HDAC1 or 2) and a recently described histone demethylase (BHC110, also known as LSD1 or AOF2). Here we show that BHC110-containing complexes show a nearly fivefold increase in demethylation of histone H3 lysine 4 (H3K4) compared to recombinant BHC110. Furthermore, recombinant BHC110 is unable to demethylate H3K4 on nucleosomes, but BHC110-containing complexes readily demethylate nucleosomes. In vitro reconstitution of the BHC complex using recombinant subunits reveals an essential role for the REST corepressor CoREST, not only in stimulating demethylation on core histones but also promoting demethylation of nucleosomal substrates. We find that nucleosomal demethylation is the result of CoREST enhancing the association between BHC110 and nucleosomes. Depletion of CoREST in in vivo cell culture results in de-repression of REST-responsive gene expression and increased methylation of H3K4. Together, these results highlight an essential role for CoREST in demethylation of H3K4 both in vitro and in vivo.