Delta/notch-like epidermal growth factor (EGF)-related receptor (DNER) is a single-pass transmembrane protein found to be a novel ligand in the Notch signaling pathway. Its function was previously characterized in the developing cerebellum and inner ear hair cells. In this study, we isolated a zebrafish homolog of DNER and showed that this gene is expressed in the developing nervous system. Overexpression of dner or the intracellular domain of dner was sufficient to inhibit the proliferation of neural progenitors and induce neuronal and glial differentiation. In contrast, the knockdown of endogenous Dner expression using antisense morpholino oligonucleotides increased the proliferation of neural progenitors and maintained neural cells in a progenitor status through inhibition of neuronal and glial differentiation. Through analysis of the antagonistic effect on the Delta ligand and the role of the potential downstream mediator Deltex1, we showed that Dner acts in Notch-dependent and Notch-independent manner. This is the first study to demonstrate a role for Dner in neural progenitors and neuronal differentiation and provides new insights into mediation of neuronal development and differentiation by the Notch signaling pathway.