During central nervous system development, glial cells need to be in the correct number and location, at the correct time, to enable axon guidance and neuropile formation. Repair of the injured or diseased central nervous system will require the manipulation of glial precursors, so that the number of glial cells is adjusted to that of neurons, enabling axonal tracts to be rebuilt, remyelinated and functional. Unfortunately, the molecular mechanisms controlling glial precursor proliferative potential are unknown. We show here that glial proliferation is regulated by interactions with axons and that the Drosophila gene prospero is required to maintain the mitotic potential of glia. During growth cone guidance, Prospero positively regulates cycE promoting cell proliferation. Neuronal Vein activates the MAPKinase signalling pathway in the glia with highest Prospero levels, coupling axon extension with glial proliferation. Later on, Prospero maintains glial precursors in an undifferentiated state by activating Notch and antagonising the p27/p21 homologue Dacapo. This enables prospero-expressing cells alone to divide further upon elimination of neurons and to adjust glial number to axons during development.