Semaphorins and their receptors, plexins, have emerged as important cellular cues regulating key developmental processes. B-type plexins directly regulate the actin cytoskeleton in a variety of cell types. Recently, B-type plexins have been shown to be expressed in striking patterns in the nervous system over critical developmental windows. However, in contrast to the well characterized plexin-A family, the functional role of plexin-B proteins in neural development and organogenesis in vertebrates in vivo is not known. Here, we have elucidated the functional contribution of the two neuronally expressed plexin-B proteins, Plexin-B1 or Plexin-B2, toward the development of the peripheral nervous system and the CNS by generating and analyzing constitutive knock-out mice. The development of the nervous system was found to be normal in mice lacking Plexin-B1, whereas mice lacking Plexin-B2 demonstrated defects in closure of the neural tube and a conspicuous disorganization of the embryonic brain. After analyzing mutant mice, which bypassed neural tube defects, we observed a key requirement for Plexin-B2 in proliferation and migration of granule cell precursors in the developing dentate gyrus, olfactory bulb, and cerebellum. Furthermore, we identified semaphorin 4C as a high-affinity ligand for Plexin-B2 in binding and functional assays. Semaphorin 4C stimulated activation of ErbB-2 and RhoA via Plexin-B2 and enhanced proliferation and migration of granule cell precursors. Semaphorin 4C-induced proliferation of ventricular zone neuroblasts was abrogated in mice lacking Plexin-B2. These genetic and functional analyses reveal a key requirement for Plexin-B2, but not Plexin-B1, in patterning of the vertebrate nervous system in vivo.