We have studied the kinematics and spatial distribution of the interstellar gas in the sky region 110° <= l <= 135°, 10° <= b <= 20°, using the extensive Leiden-Dwingeloo Survey of HI emission and the Columbia Survey of CO emission. The spectra show two main velocity components, namely feature A that has a mean local standard of rest (LSR) velocity of ~0 kms-1 and is due to the Lindblad ring of the Gould belt, and feature C that has a mean LSR velocity of ~ -11 kms-1 and is associated to the local arm or Orion arm. The HI and CO distributions of feature A in the region trace a large complex of gas and dust known as the Cepheus Flare, which lies at a distance of 300 pc. The spectral line profiles of feature A, which are rather broad and often double-peaked, reveal that the Cepheus Flare forms part of a big expanding shell of interstellar matter that encloses an old supernova remnant associated with a void inside the Cepheus Flare. On the other hand, by analysing the distribution and velocity structure of feature C, we have detected a second large expanding shell in the region, located at a distance of 800 pc in the local arm. This shell surrounds the stellar association Cepheus OB4 and was probably generated by stellar winds and supernovae of Cepheus OB4. The radii, expansion velocities and HI masses of the two shells are approximately 50 pc, 4 kms-1 and 1.3 × 104Msolar for the Cepheus Flare shell and 100 pc, 4kms-1 and 9.9 × 104Msolar for the Cepheus OB4 shell. Both shells have similar ages of the order of a few 106yr.