Musashi1 (Msi1) is an RNA-binding protein that is highly expressed in neural stem/progenitor cells (NS/PCs) as well as in other tissue stem cells. Msi1 binds to the 3'-UTR of its target mRNAs in NS/PCs, prevents their translation, and interferes with NS/PC differentiation. We previously showed that Msi1 competes with eIF4G to bind poly(A)-binding protein and inhibits assembly of the 80 S ribosome. Here we show that Msi1 works in concert with Lin28 to regulate post-transcriptional microRNA (miRNA) biogenesis in the cropping step, which occurs in the nucleus. Lin28 and its binding partner terminal uridylyltransferase 4 (TUT4) are known to maintain embryonic stem cell pluripotency by blocking let-7 miRNA biogenesis at the dicing step. Interestingly, we found that during early neural differentiation of embryonic stem cells, Msi1 enhanced the localization of Lin28 to the nucleus and also inhibited the nuclear cropping step of another let-7 family miRNA, miR98. These results suggest that Msi1 can influence stem cell maintenance and differentiation by controlling the subcellular localization of proteins involved in miRNA biogenesis, as well as by regulating the translation of its target mRNA.