How conserved pathways are differentially regulated to produce diverse outcomes is a fundamental question of developmental and evolutionary biology. The conserved process of neural precursor cell (NPC) selection by basic helix-loop-helix (bHLH) proneural transcription factors in the peripheral nervous system (PNS) by atonal related proteins (ARPs) presents an excellent model in which to address this issue. Proneural ARPs belong to two highly related groups: the ATONAL (ATO) group and the NEUROGENIN (NGN) group. We used a cross-species approach to demonstrate that the genetic and molecular mechanisms by which ATO proteins and NGN proteins select NPCs are different. Specifically, ATO group genes efficiently induce neurogenesis in Drosophila but very weakly in Xenopus, while the reverse is true for NGN group proteins. This divergence in proneural activity is encoded by three residues in the basic domain of ATO proteins. In NGN proteins, proneural capacity is encoded by the equivalent three residues in the basic domain and a novel motif in the second Helix (H2) domain. Differential interactions with different types of zinc (Zn)-finger proteins mediate the divergence of ATO and NGN activities: Senseless is required for ATO group activity, whereas MyT1 is required for NGN group function. These data suggest an evolutionary divergence in the mechanisms of NPC selection between protostomes and deuterostomes.