Hydrocephalus is a common neurological disorder that leads to expansion of the cerebral ventricles and is associated with a high rate of morbidity and mortality. Most neonatal cases are of unknown etiology and are likely to have complex inheritance involving multiple genes and environmental factors. Identifying molecular mechanisms for neonatal hydrocephalus and developing noninvasive treatment modalities are high priorities. Here we use a hydrocephalic mouse model of the human ciliopathy Bardet-Biedl Syndrome (BBS) and identify a role for neural progenitors in the pathogenesis of neonatal hydrocephalus. We found that hydrocephalus in this mouse model is caused by aberrant platelet-derived growth factor receptor α (PDGFR-α) signaling, resulting in increased apoptosis and impaired proliferation of chondroitin sulfate proteoglycan 4 (also known as neuron-glial antigen 2 or NG2)(+)PDGFR-α(+) neural progenitors. Targeting this pathway with lithium treatment rescued NG2(+)PDGFR-α(+) progenitor cell proliferation in BBS mutant mice, reducing their ventricular volume. Our findings demonstrate that neural progenitors are crucial in the pathogenesis of neonatal hydrocephalus, and we identify new therapeutic targets for this common neurological disorder.