The transcription factor Erm is a member of the Pea3 subfamily of Ets domain proteins that is expressed in multipotent neural crest cells, peripheral neurons, and satellite glia. A specific role of Erm during development has not yet been established. We addressed the function of Erm in neural crest development by forced expression of a dominant-negative form of Erm. Functional inhibition of Erm in neural crest cells interfered with neuronal fate decision, while progenitor survival and proliferation were not affected. In contrast, blocking Erm function in neural crest stem cells did not influence their ability to adopt a glial fate, independent of the glia-inducing signal. Furthermore, glial survival and differentiation were normal. However, the proliferation rate was drastically diminished in glial cells, suggesting a glia-specific role of Erm in controlling cell cycle progression. Thus, in contrast to other members of the Pea3 subfamily that are involved in late steps of neurogenesis, Erm appears to be required in early neural crest development. Moreover, our data point to multiple, lineage-specific roles of Erm in neural crest stem cells and their derivatives, suggesting that Erm function is dependent on the cell intrinsic and extrinsic context.