An important epigenetic modification is the methylation/demethylation of histone lysine residues. The first histone demethylase to be discovered was a lysine-specific demethylase 1, LSD1, a flavin containing enzyme which carries out the demethylation of di- and monomethyllysine 4 in histone H3. The removed methyl groups are oxidized to formaldehyde. This reaction is similar to those performed by dimethylglycine dehydrogenase and sarcosine dehydrogenase, in which protein-bound tetrahydrofolate (THF) was proposed to serve as an acceptor of the generated formaldehyde. We showed earlier that LSD1 binds THF with high affinity which suggests its possible participation in the histone demethylation reaction. In the cell, LSD1 interacts with co-repressor for repressor element 1 silencing transcription factor (CoREST). In order to elucidate the role of folate in the demethylating reaction we solved the crystal structure of the LSD1-CoREST-THF complex. In the complex, the folate-binding site is located in the active center in close proximity to flavin adenine dinucleotide. This position of the folate suggests that the bound THF accepts the formaldehyde generated in the course of histone demethylation to form 5,10-methylene-THF. We also show the formation of 5,10-methylene-THF during the course of the enzymatic reaction in the presence of THF by mass spectrometry. Production of this form of folate could act to prevent accumulation of potentially toxic formaldehyde in the cell. These studies suggest that folate may play a role in the epigenetic control of gene expression in addition to its traditional role in the transfer of one-carbon units in metabolism.