Individuals with neurofibromatosis type 1 (NF1) develop abnormalities of both neuronal and glial cell lineages, suggesting that the NF1 protein neurofibromin is an essential regulator of neuroglial progenitor function. In this regard, Nf1-deficient embryonic telencephalic neurospheres exhibit increased self-renewal and prolonged survival as explants in vivo. Using a newly developed brain lipid binding protein (BLBP)-Cre mouse strain to study the role of neurofibromin in neural progenitor cell function in the intact animal, we now show that neuroglial progenitor Nf1 inactivation results in increased glial lineage proliferation and abnormal neuronal differentiation in vivo. Whereas the glial cell lineage abnormalities are recapitulated by activated Ras or Akt expression in vivo, the neuronal abnormalities were Ras- and Akt independent and reflected impaired cAMP generation in Nf1-deficient cells in vivo and in vitro. Together, these findings demonstrate that neurofibromin is required for normal glial and neuronal development involving separable Ras-dependent and cAMP-dependent mechanisms.