Development of the postnatal cerebellum relies on the tight regulation of cell number by morphogens that control the balance between cell proliferation, survival and differentiation. Here, we analyze the role of the serine-protease inhibitor protease nexin 1 (PN-1; SERPINE2) in the proliferation and differentiation of cerebellar granular neuron precursors (CGNPs) via the modulation of their main mitogenic factor, sonic hedgehog (SHH). Our studies show that PN-1 interacts with low-density lipoprotein receptor-related proteins (LRPs) to antagonize SHH-induced CGNP proliferation and that it inhibits the activity of the SHH transcriptional target GLI1. The binding of PN-1 to LRPs interferes with SHH-induced cyclin D1 expression. CGNPs isolated from Pn-1-deficient mice exhibit enhanced basal proliferation rates due to overactivation of the SHH pathway and show higher sensitivity to exogenous SHH. In vivo, the Pn-1 deficiency alters the expression of SHH target genes. In addition, the onset of CGNP differentiation is delayed, which results in an enlarged outer external granular layer. Furthermore, the Pn-1 deficiency leads to an overproduction of CGNPs and to enlargement of the internal granular layer in a subset of cerebellar lobes during late development and adulthood. We propose that PN-1 contributes to shaping the cerebellum by promoting cell cycle exit.