Non-malignant cells can be transformed via the activation of kinases that control degradation of neural-restrictive silencer factor (REST). Here, we identify a mechanism that contributes to the activation of genes, expression of which is controlled by responsive elements containing overlapping binding sites for REST and nucleolin. We demonstrate that both phosphorylated and non-phosphorylated nucleolin-bound DNA; however, only phosphorylated nucleolin successfully competed with either full-length REST or a REST-derived DNA-binding peptide, REST68, for binding to the overlapping binding sites. We show that this interplay between the two transcription factors regulates the activation of cell survival and immunomodulatory genes in tumors and non-malignant cells with activated protein kinase C, which is accompanied with alterations in cell proliferation and apoptosis. We propose a model for the regulation of these genes, which brings a new insight into the molecular mechanisms that control cellular transformation driven by activation of protein kinases.