© 2015 Nature Publishing Group, a division of Macmillan Publishers Limited. All Rights Reserved. Ten-eleven translocation (TET) enzymes mediate the conversion of 5-methylcytosine (5mC) to 5-hydroxymethylcytosine (5hmC), which is enriched in brain, and its ultimate DNA demethylation. However, the influence of TET and 5hmC on gene transcription in brain remains elusive. We found that ten-eleven translocation protein 1 (TET1) was downregulated in mouse nucleus accumbens (NAc), a key brain reward structure, by repeated cocaine administration, which enhanced behavioral responses to cocaine. We then identified 5hmC induction in putative enhancers and coding regions of genes that have pivotal roles in drug addiction. Such induction of 5hmC, which occurred similarly following TET1 knockdown alone, correlated with increased expression of these genes as well as with their alternative splicing in response to cocaine administration. In addition, 5hmC alterations at certain loci persisted for at least 1 month after cocaine exposure. Together, these reveal a previously unknown epigenetic mechanism of cocaine action and provide new insight into how 5hmC regulates transcription in brain in vivo.