Discrimination of neural stem cells from other progenitors in the developing mammalian brain has been hampered by the lack of specific markers. Identifying the progenitor pools and signalling pathways that guide mammalian neurogenesis are central to understanding the complex mechanisms that govern development of the nervous system. Notch signalling plays a pivotal role in the development of the mammalian nervous system by maintaining multipotent neural stem cells and regulating their fate. In order to identify putative neural stem cells in situ, we generated transgenic mice that express Green Fluorescent Protein (GFP) and report Notch signalling activity in the developing CNS. Here we show the subdivision of progenitors within the neural tube of these mice. We purify progenitors from the neural tube and show that cells with the highest levels of Notch-reporter activity have self-renewal capability and multipotency, whereas those lacking Hes5 expression do not form neurospheres in vitro. Using marker protein co-expression and cell sorting, we show that both neuroepithelial cells as well as some radial glia at all axial levels of the embryonic neural tube display active Notch signalling. However, Tbr2-positive basal progenitors of the developing telencephalon and differentiating Islet1/2- and Lim1-positive motor neurons outside the ventricular zone do not express Hes5-GFP. Quantitative analysis showed that Hes5 expression correlates better with neural stem cell potential than expression of the related gene Hes1. Thus, Notch activity through Hes5 identifies multipotent progenitors with stem cell properties and subdivides the different progenitors into defined pools.