The molecular mechanisms used to generate neuronal diversity are largely unknown. To identify genes controlling cell fate in the Drosophila central nervous system, we screened for mutations that alter expression of homeobox genes in the developing central nervous system (indicating changes in cell fates). We also screened "enhancer trap" lines to identify genes expressed in neuronal stem cells (neuroblasts). The prospero gene was discovered in both screens. prospero is expressed in a subset of neuroblasts, sensory neuron precursors, and identified glial precursors. It is not expressed in neurons. Neuroblasts lacking prospero function generate abnormal cell lineages, producing incorrectly specified progeny that differentiate into neurons showing axon pathfinding defects. prospero is therefore a novel type of gene expressed in neuroblasts and known to specify neuronal fate.