We have used measurements by the Fermi Large Area Telescope (LAT) to study the interstellar gamma-ray emission in a region of the second Galactic quadrant, at 100 deg < l < 145 deg and -15 deg < b < 30 deg. This region encompasses the prominent Gould-Belt clouds of Cassiopeia, Cepheus, and the Polaris flare, as well as large atomic and molecular complexes at larger distances in several spiral arms. The good kinematic separation in velocity between the local, Perseus, and outer arms, and the presence of massive complexes in each, make this region very well suited to probe the gamma-ray emission from the interstellar medium beyond the solar circle. The unprecedented sensitivity and angular resolution of the LAT provide improved constraints on the gradient of the cosmic-ray densities and on the increase of the CO-to-H2 conversion factor, Xco, in the outer Galaxy.