Nitric oxide (NO) is believed to act as an intercellular signal that regulates synaptic plasticity in mature neurons. We now report that NO also regulates the proliferation and differentiation of mouse brain neural progenitor cells (NPCs). Treatment of dissociated mouse cortical neuroepithelial cluster cell cultures with the NO synthase inhibitor L-NAME or the NO scavenger hemoglobin increased cell proliferation and decreased differentiation of the NPCs into neurons, whereas the NO donor sodium nitroprusside inhibited NPC proliferation and increased neuronal differentiation. Brain-derived neurotrophic factor (BDNF) reduced NPC proliferation and increased the expression of neuronal NO synthase (nNOS) in differentiating neurons. The stimulatory effect of BDNF on neuronal differentation of NPC was blocked by L-NAME and hemoglobin, suggesting that NO produced by the latter cells inhibited proliferation and induced neuronal differentiation of neighboring NPCs. A similar role for NO in regulating the switch of neural stem cells from proliferation to differentiation in the adult brain is suggested by data showing that NO synthase inhibition enhances NPC proliferation and inhibits neuronal differentiation in the subventricular zone of adult mice. These findings identify NO as a paracrine messenger stimulated by neurotrophin signaling in newly generated neurons to control the proliferation and differentiation of NPC, a novel mechanism for the regulation of developmental and adult neurogenesis.