Using a systematic, whole-genome analysis of enhancer activity of human-specific endogenous retroviral inserts (hsERVs), we identified an element, hsERVPRODH, that acts as a tissue-specific enhancer for the PRODH gene, which is required for proper CNS functioning. PRODH is one of the candidate genes for susceptibility to schizophrenia and other neurological disorders. It codes for a proline dehydrogenase enzyme, which catalyses the first step of proline catabolism and most likely is involved in neuromediator synthesis in the CNS. We investigated the mechanisms that regulate hsERVPRODHenhancer activity. We showed that the hsERVPRODHenhancer and the internal CpG island of PRODH synergistically activate its promoter. The enhancer activity of hsERVPRODHis regulated by methylation, and in an undermethylated state it can up-regulate PRODH expression in the hippocampus. The mechanism of hsERVPRODHenhancer activity involves the binding of the transcription factor SOX2, whch is preferentially expressed in hippocampus. We propose that the interaction of hsERVPRODHand PRODH may have contributed to human CNS evolution.