Genetic evidence indicates disrupted epigenetic regulation as a major risk factor for psychiatric disorders, but the molecular mechanisms that drive this association remain to be determined. EHMT1 is an epigenetic repressor that is causal for Kleefstra Syndrome (KS), a genetic disorder linked with neurodevelopmental disorders and associated with schizophrenia. Here, we show that reduced EHMT1 activity decreases NRSF/REST protein leading to abnormal neuronal gene expression and progression of neurodevelopment in human iPSC. We further show that EHMT1 regulates NRSF/REST indirectly via repression of miRNA and leads to aberrant neuronal gene regulation and neurodevelopment timing. Expression of a NRSF/REST mRNA that lacks the miRNA-binding sites restores neuronal gene regulation to EHMT1 deficient cells. Significantly, the EHMT1-regulated miRNA gene set not only controls NRSF/REST but is enriched for association for Intellectual Disability (ID) and schizophrenia. This reveals a broad molecular interaction between H3K9 demethylation, NSRF/REST regulation and risk for ID and Schizophrenia.