Functions to regulate alternative splicing in neurons by binding pre-mRNA in a sequence-specific manner to activate exon inclusion or exclusion. It binds specifically to the sequences 5'-YCAY-3' and regulates splicing in only a subset of regulated exons. Binding to an exonic 5'-YCAY-3' cluster changes the protein complexes assembled on pre-mRNA, blocking U1 snRNP binding and exon inclusion, whereas binding to an intronic 5'-YCAY-3' cluster enhances spliceosome assembly and exon inclusion (PubMed:12124753). Binding to 5'-YCAY-3' clusters results in a local and asymmetric action to regulate spliceosome assembly and alternative splicing in neurons. Binding to an exonic 5'-YCAY-3' cluster changed the protein complexes assembled on pre-mRNA, blocking U1 snRNP (small nuclear ribonucleoprotein) binding and exon inclusion, whereas binding to an intronic 5'-YCAY-3' cluster enhanced spliceosome assembly and exon inclusion. With NOVA1, they perform unique biological functions in different brain areas and cell types. Autoregulates its own expression by acting as a splicing repressor. Acts to activate the inclusion of exon E3A in the glycine receptor alpha-2 chain and of exon E9 in gamma-aminobutyric-acid receptor gamma-2 subunit via a distal downstream UCAU-rich intronic splicing enhancer. Acts to regulate a novel glycine receptor alpha-2 chain splice variant (alpha-2N) in developing spinal cord. Interacts with PTBP2; the interaction is direct. The KH domain consists of approximately 70 amino acids and includes a conserved hydrophobic core, an invariant Gly-X-X-Gly motif, and an additional variable segment. The third KH domain (KH3) binds a hairpin RNA loop containing the 5'-UCAY-3' motif on targeted molecules. RNA binding by KH3 requires residues C-terminal to the KH domain.