Temporal regulation of embryonic neurogenesis is controlled by hypostable transcription factors. The mechanism of the process is unclear. Here we show that the RNase III Drosha and DGCR8 (also known as Pasha), key components of the microRNA (miRNA) microprocessor, have important functions in mouse neurogenesis. Loss of microprocessor in forebrain neural progenitors resulted in a loss of stem cell character and precocious differentiation whereas Dicer deficiency did not. Drosha negatively regulated expression of the transcription factors Neurogenin 2 (Ngn2) and NeuroD1 whereas forced Ngn2 expression phenocopied the loss of Drosha. Neurog2 mRNA contains evolutionarily conserved hairpins with similarities to pri-miRNAs, and associates with the microprocessor in neural progenitors. We uncovered a Drosha-dependent destabilization of Neurog2 mRNAs consistent with microprocessor cleavage at hairpins. Our findings implicate direct and miRNA-independent destabilization of proneural mRNAs by the microprocessor, which facilitates neural stem cell (NSC) maintenance by blocking accumulation of differentiation and determination factors.