To ensure normal development and maintenance of homeostasis, the extensive developmental potential of stem cells must be functionally distinguished from the limited developmental potential of transit amplifying cells. Yet the mechanisms that restrict the developmental potential of transit amplifying cells are poorly understood. Here we show that the evolutionarily conserved transcription factor dFezf/Earmuff (Erm) functions cell-autonomously to maintain the restricted developmental potential of the intermediate neural progenitors generated by type II neuroblasts in Drosophila larval brains. Although erm mutant intermediate neural progenitors are correctly specified and show normal apical-basal cortical polarity, they can dedifferentiate back into a neuroblast state, functionally indistinguishable from normal type II neuroblasts. Erm restricts the potential of intermediate neural progenitors by activating Prospero to limit proliferation and by antagonizing Notch signaling to prevent dedifferentiation. We conclude that Erm dependence functionally distinguishes intermediate neural progenitors from neuroblasts in the Drosophila larval brain, balancing neurogenesis with stem cell maintenance.
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