Sensory bristle formation in Drosophila is a well-characterized system for studying sensory organ development at the molecular level. The master proneural genes of the achaete-scute (ac-sc) complex, which encode basic-helix-loop-helix (bHLH) transcription factors, are necessary and sufficient for sensory bristle formation. charlatan (chn) was originally identified as a transcriptional activator of ac-sc gene expression through interaction with its enhancer, an activity that promotes sensory bristle development. In contrast, Chn was also identified as a functional homologue of mammalian neuron-restrictive silencing factor or RE1 silencing transcription factor (NRSF/REST), an important transcriptional repressor during vertebrate neurogenesis and stem cell development that acts through epigenetic gene silencing. Here, we report that Chn acts as a repressor of extramacrochaetae (emc) and hairy, molecules that inhibit ac-sc expression. This double-negative mechanism, together with direct activation via the achaete enhancer, increases expression of achaete and ensures robust development of sensory neurons. A mutation in the C-terminal repressor motif of Chn, which causes Chn to lose its repression activity, converted Chn to an activator of emc and hairy, suggesting that Chn is a dual functional regulator of transcription. Because chn-like sequences are found among arthropods, regulation of neuronal development by Chn-like molecules may be widely conserved.