The Drosophila central nervous system is produced by two rounds of neurogenesis: one during embryogenesis to form the larval brain and one during larval stages to form the adult central nervous system. Neurogenesis caused by the activation of neural stem division in the larval brain is essential for the proper patterning and functionality of the adult central nervous system. Initiation of neuroblast proliferation requires signaling by the Fibroblast Growth Factor homolog Branchless and by the Hedgehog growth factor. We show here that the Branchless and Hedgehog pathways form a positive feedback loop to regulate the onset of neuroblast division. This feedback loop is initiated during embryogenesis. Our genetic and molecular studies demonstrate that the absolute level of Branchless and Hedgehog signaling is critical to fully activate stem cell division. Furthermore, over-expression and mutant studies establish that signaling by Branchless is the crucial output of the feedback loop that stimulates neuroblast division and that Branchless signaling is necessary for initiating the division of all mitotically regulated neuroblasts in the brain lobes. These studies establish the molecular mechanism through which Branchless and Hedgehog signaling interface to regulate the activation of neural stem cell division.