Lysine-specific demethylase 1 (LSD1/KDM1A) removes methylation of histone and non-histone substrates, and recruits a repressive chromatin complex. De novo LSD1 mutations impairing protein function lead to a rare neurodevelopmental disorder, but the molecular mechanisms of the pathology are unclear. Using patient-derived fibroblasts, reprogrammed pluripotent stem cells, and differentiated cells, we found over 4000 differentially expressed genes and 68 transcription factors (TFs) whose motif accessibilities changed upon LSD1 mutation. An enhancer-mediated gene regulatory network approach identified impaired transcriptional repressor activity in fibroblast and stem cells, leading to erroneous activation of their target genes. Furthermore, our analysis revealed overall decreases in TF target genes specifically during early lineage differentiation of LSD1 mutant stem cells, likely caused by increased activity of repressive co-factors of LSD1 - histone deacetylases (HDACs). Consistently, HDAC inhibitor restored changes in gene expression including downregulation phenotype. Our findings provide insights into pathogenesis of LSD1 mutations and targets for further therapeutic studies.