Neural stem cells proliferate and maintain multipotency when cultured in the presence of FGF2, but subsequent lineage commitment by the cells is nevertheless influenced by the exposure to FGF2. Here we show that FGF2 effects on neural stem cells are mediated, in part, by beta-catenin. Conversely, the effects of beta-catenin in neural stem cells depend in part upon whether there is concurrent fibroblast growth factor (FGF) signaling. FGF2 increases beta-catenin signaling through several different mechanisms including increased expression of beta-catenin mRNA, increased nuclear translocation of beta-catenin, increased phosphorylation of GSK-3beta, and tyrosine phosphorylation of beta-catenin. Overexpression of beta-catenin in the presence of FGF2 helps to maintain neural progenitor cells in a proliferative state. However, overexpression of beta-catenin in the absence of FGF2 enhances neuronal differentiation. Further, chromatin immunoprecipitation (ChIP) assays demonstrate that both beta-catenin and Lef1 bind directly to the neurogenin promoter, and luciferase reporter assays demonstrate that beta-catenin is directly involved in the regulation of neurogenin 1 and possibly other proneural genes when neural stem cells are cultured in the presence of FGF2. We suggest that the balance between the mitogenic effects and the proneural effects of beta-catenin is determined by the presence of FGF signaling.