Barenholtz purchased the film and entered it into the midnight movie circuit. In the late '70's, Midnight Movies were a success and made films that were initially overlooked marketable. These were typically low-budget films that did not particularly follow the production code and contained risky or disturbing scenes. ERASERHEAD is known as one of the most successful midnight movies along with EL TOPO, PINK FLAMINGOS and THE HARDER THEY COME, films that were overlooked or did not do well when they were originally released to theaters.
Barenholtz was able to get ERASERHEAD shown as a midnight feature at the Cinema Village theater on 12th Street in Greenwich Village. After running a full year at Cinema Village, it moved to the Waverly Theater (where it ran for ninety-nine weeks) and ran for a year at San Francisco’s Roxie Theater.