Drosophila neuroblasts are similar to mammalian neural stem cells in their ability to self-renew and to produce many different types of neurons and glial cells. In the past two decades, great advances have been made in understanding the molecular mechanisms underlying embryonic neuroblast formation, the establishment of cell polarity and the temporal regulation of cell fate. It is now a challenge to connect, at the molecular level, the different cell biological events underlying the transition from neural stem cell maintenance to differentiation. Progress has also been made in understanding the later stages of development, when neuroblasts become mitotically inactive, or quiescent, and are then reactivated postembryonically to generate the neurons that make up the adult nervous system. The ability to manipulate the steps leading from quiescence to proliferation and from proliferation to differentiation will have a major impact on the treatment of neurological injury and neurodegenerative disease.