MicroRNAs orchestrate brain functioning via interaction with microRNA recognition elements (MRE) on target transcripts. However, the global impact of potential competition on the microRNA pool between coding and non-coding brain transcripts that share MREs with them remains unexplored. Here we report that non-coding pseudogene transcripts carrying MREs (PSG+MRE) often show duplicated origin, evolutionary conservation and higher expression in human temporal lobe neurons than comparable duplicated MRE-deficient pseudogenes (PSG-MRE). PSG+MRE participate in neuronal RNA-induced silencing complexes (RISC), indicating functional involvement. Furthermore, downregulation cell culture experiments validated bidirectional co-regulation of PSG+MRE with MRE-sharing coding transcripts, frequently not their mother genes, and with targeted microRNAs; also, PSG+MRE single-nucleotide polymorphisms associated with schizophrenia, bipolar disorder and autism, suggesting interaction with mental diseases. Our findings indicate functional roles of duplicated PSG+MRE in brain development and cognition, supporting physiological impact of the reciprocal co-regulation of PSG+MRE with MRE-sharing coding transcripts in human brain neurons.