Many Ig superfamily members are expressed in the developing nervous system, but the functions of these molecules during neurogenesis are not all clear. Here, we explore the expression and function of one of members of this superfamily, protogenin (PRTG), in the developing nervous system. Expression of PRTG protein is strong in the neural tube of mouse embryos between embryonic days 7.75 and 9.5 but disappears after embryonic day 10.5 when the neural progenitor marker nestin expresses prominently. Perturbation of PRTG activity in P19 embryonal carcinoma cells and in chick embryos, by either RNA interference or a dominant-negative PRTG mutant, increases neuronal differentiation. Using yeast two-hybrid screening and anin situbinding assay, we were able to identify ERdj3 (a stress-inducible endoplasmic reticulum DnaJ homolog) as a putative PRTG ligand. Addition of purified ERdj3 protein into the P19 differentiation assay reduced neurogenesis. This effect was blocked by addition of either a neutralizing antibody against PRTG or purified PRTG ectodomain protein, indicating that the effect of ERdj3 on neurogenesis is mediated through PRTG. Forced expression of ERdj3 in the chick neural tube also impairs neuronal differentiation. Together, these results suggest that expression of PRTG defines a stage between pluripotent epiblasts and committed neural progenitors, and its signaling plays a critical role in suppressing premature neuronal differentiation during early neural development.