Disruption of polyubiquitin gene Ubb leads to early-onset reactive gliosis and adult-onset hypothalamic neurodegeneration in mice. However, it remains unknown why reduced levels of ubiquitin (Ub) due to loss of Ubb lead to these neural phenotypes. To determine whether or not the defects in neurons or their progenitors per se, but not in their cellular microenvironment, are the cause of the neural phenotypes observed in Ubb^−/− mice, we investigated the properties of cultured cells isolated from Ubb^−/− mouse embryonic brains. Although cells were cultured under conditions promoting neuronal growth, Ubb^−/− cells underwent apoptosis during culture in vitro, with increased numbers of glial cells and decreased numbers of neurons. Intriguingly, at the beginning of the Ubb^−/− cell culture, the number of neural stem cells (NSCs) significantly decreased due to their reduced proliferation and their premature differentiation into glial cells. Furthermore, upregulation of Notch target genes due to increased steady-state levels of Notch intracellular domain (NICD) led to the dramatic reduction of proneuronal gene expression in Ubb^−/− cells, resulting in inhibition of neurogenesis and promotion of gliogenesis. Therefore, our study suggests an unprecedented role for cellular Ub pools in determining the fate and self-renewal of NSCs.