During development, coordinate regulation of cell cycle exit and differentiation of neuronal precursors is essential for generation of appropriate number of neurons and proper wiring of neuronal circuits. BM88 is a neuronal protein associated in vivo with terminal neuron-generating divisions, marking the exit of proliferative cells from the cell cycle. Here, we provide functional evidence that BM88 is sufficient to initiate the differentiation of spinal cord neural precursors toward acquisition of generic neuronal and subtype-specific traits. Gain-of-function approaches show that BM88 negatively regulates proliferation of neuronal precursors, driving them to prematurely exit the cell cycle, down-regulate Notch1, and commit to a neuronal differentiation pathway. The combined effect on proliferation and differentiation results in precocious induction of neurogenesis and generation of postmitotic neurons within the ventricular zone. The dual action of BM88 is not recapitulated by the cell cycle inhibitor p27(Kip1), suggesting that cell cycle exit does not induce differentiation by default. Mechanistically, induction of endogenous BM88 by forced expression of the proneural gene Mash1 indicates that BM88 is part of the differentiation program activated by proneural genes. Furthermore, BM88 gene silencing conferred by small interfering RNA in spinal cord neural progenitor cells enhances cell cycle progression and impairs neuronal differentiation. Our results implicate BM88 in the synchronization of cell cycle exit and differentiation of neuronal precursors in the developing nervous system.