Transgenic mice expressing a stabilized beta-catenin in neural precursors develop enlarged brains with increased cerebral cortical surface area and folds resembling sulci and gyri of higher mammals. Brains from transgenic animals have enlarged lateral ventricles lined with neuroepithelial precursor cells, reflecting an expansion of the precursor population. Compared with wild-type precursors, a greater proportion of transgenic precursors reenter the cell cycle after mitosis. These results show that beta-catenin can function in the decision of precursors to proliferate or differentiate during mammalian neuronal development and suggest that beta-catenin can regulate cerebral cortical size by controlling the generation of neural precursor cells.