Coherent network activity among assemblies of interconnected cells is essential for diverse functions in the adult brain. However, cellular networks before formations of chemical synapses are poorly understood. Here, embryonic stem cell-derived neural progenitors were found to form networks exhibiting synchronous calcium ion (Ca(2+)) activity that stimulated cell proliferation. Immature neural cells established circuits that propagated electrical signals between neighboring cells, thereby activating voltage-gated Ca(2+) channels that triggered Ca(2+) oscillations. These network circuits were dependent on gap junctions, because blocking prevented electrotonic transmission both in vitro and in vivo. Inhibiting connexin 43 gap junctions abolished network activity, suppressed proliferation, and affected embryonic cortical layer formation. Cross-correlation analysis revealed highly correlated Ca(2+) activities in small-world networks that followed a scale-free topology. Graph theory predicts that such network designs are effective for biological systems. Taken together, these results demonstrate that immature cells in the developing brain organize in small-world networks that critically regulate neural progenitor proliferation.