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) often show duplicated origin, evolutionary conservation and higher expression in human temporal lobe neurons than comparable duplicated MRE-deficient pseudogenes (PSG). PSG participate in neuronal RNA-induced silencing complexes (RISC), indicating functional involvement. Furthermore, downregulation cell culture experiments validated bidirectional co-regulation of PSG with MRE-sharing coding transcripts, frequently not their mother genes, and with targeted microRNAs; also, PSG single-nucleotide polymorphisms associated with schizophrenia, bipolar disorder and autism, suggesting interaction with mental diseases. Our findings indicate functional roles of duplicated PSG in brain development and cognition, supporting physiological impact of the reciprocal co-regulation of PSG with MRE-sharing coding transcripts in human brain neurons.