miR-124 is a highly conserved microRNA (miRNA) whose in vivo function is poorly understood. Here, we identify miR-124 targets based on the analysis of the first mir-124 mutant in any organism. We find that miR-124 is expressed in many sensory neurons in Caenorhabditis elegans and onset of expression coincides with neuronal morphogenesis. We analyzed the transcriptome of miR-124 expressing and nonexpressing cells from wild-type and mir-124 mutants. We observe that many targets are co-expressed with and actively repressed by miR-124. These targets are expressed at reduced relative levels in sensory neurons compared to the rest of the animal. Our data from mir-124 mutant animals show that this effect is due to a large extent to the activity of miR-124. Genes with nonconserved target sites show reduced absolute expression levels in sensory neurons. In contrast, absolute expression levels of genes with conserved sites are comparable to control genes, suggesting a tuning function for many of these targets. We conclude that miR-124 contributes to defining cell-type-specific gene activity by repressing a diverse set of co-expressed genes.