Tumor‐initiating stem cells (also referred to as cancer stem cells, CSCs) are a subpopulation of cancer cells that play unique roles in tumor propagation, therapeutic resistance and tumor recurrence. It is increasingly important to understand how molecular signaling regulates the self‐renewal and differentiation of CSCs. Basic helix‐loop‐helix (bHLH) transcription factors are critical for the differentiation of normal stem cells, yet their roles in neoplastic stem cells are not well understood. In glioblastoma neurosphere cultures that contain cancer stem cells (GBM‐CSCs), the bHLH family member inhibitors of DNA binding protein 2 and 4 (Id2 and Id4) were found to be upregulated during the differentiation of GBM‐CSCs in response to histone deacetylase inhibitors. In this study, we examined the functions of Id2 and Id4 in GBM neurosphere cells and identified Id proteins as efficient differentiation regulators of GBM‐CSCs. Overexpression of Id2 and Id4 promoted the lineage‐specific differentiation of GBM neurosphere cells as evidenced by the induction of neuronal/astroglial differentiation markers Tuj1 and GFAP and the inhibition of the oligodendroglial marker GalC. Id protein overexpression also reduced both stem cell marker expression and neurosphere formation potential, a biological marker of cancer cell “stemness.” We further showed that Id2 and Id4 regulated GBM neurosphere differentiation through downregulating of another bHLH family member, the oligodendroglial lineage‐associated transcription factors (Olig) 1 and 2. Our results provide evidence for distinct functions of Id proteins in neoplastic stem cells, which supports Id proteins and their downstream targets as potential candidates for differentiation therapy in CSCs. (Cancer Sci 2012; 103: 1028–1037)