Neural stem cells and progenitors in the developing brain must choose between proliferation with renewal and differentiation. Defects in navigating this choice can result in malformations or cancers, but the genetic mechanisms that shape this choice are not fully understood. We show by positional cloning that the 30-zinc finger transcription factor Zfp423 (OAZ) is required for patterning the development of neuronal and glial precursors in the developing brain, particularly in midline structures. Mutation of Zfp423 results in loss of the corpus callosum, reduction of hippocampus, and a malformation of the cerebellum reminiscent of human Dandy-Walker patients. Within the cerebellum, Zfp423 is expressed in both ventricular and external germinal zones. Loss of Zfp423 results in diminished proliferation by granule cell precursors in the external germinal layer, especially near the midline, and abnormal differentiation and migration of ventricular zone-derived neurons and Bergmann glia.