The mechanisms that determine whether a precursor cell re-enters the cell cycle or exits and differentiates are crucial in determining the types and numbers of cells that constitute a particular organ. Here, we report that Id4 is required for normal brain size, and regulates lateral expansion of the proliferative zone in the developing cortex and hippocampus. In its absence, proliferation of stem cells in the ventricular zone (VZ) is compromised. In early cortical progenitors, Id4 is required for the normal G1-S transition. By contrast, at later ages, ectopically positioned proliferating cells are found in the mantle zone of the Id4-/- cortex. These observations, together with evidence for the premature differentiation of early cortical stem cells, indicate that Id4 has a unique and complex function in regulating neural stem cell proliferation and differentiation.