Rett syndrome (RTT) is a progressive neurological disorder caused by mutations in the X-linked gene methyl-CpG-binding protein 2 (MeCP2). The endogenous function of MeCP2 during neural differentiation is still unclear. Here we report that mecp2 is critical for brain development in zebrafish. Mecp2 was broadly expressed initially in embryos and enriched later in the brain. Either morpholino knockdown or genetic depletion of mecp2 inhibited neuronal differentiation, while its over-expression promoted neuronal differentiation, suggesting an essential role of mecp2 in directing neural precursors into differentiated neurons. Mechanistically, her2/hes5 was upregulated in mecp2 morphants in an Id1-dependent manner. Moreover, knockdown of either her2/hes5 or id1 fully rescued neuronal differentiation in mecp2 morphants. These results suggest that Mecp2 plays an important role in neural cell development by suppressing the Id1-Her2/Hes5 axis, and provide new evidence that embryonic neural defects contribute to the later motor and cognitive dysfunctions in RTT.