Genetic mutations that cause adult-onset neurodegenerative diseases are often expressed during embryonic stages, but it is unclear whether they alter neurodevelopment and how this might influence disease onset. Here, we show that the most common cause of frontotemporal dementia (FTD) and amyotrophic lateral sclerosis (ALS), a repeat expansion in C9ORF72, restricts neural stem cell proliferation and reduces cortical and thalamic size in utero. Surprisingly, a repeat expansion-derived dipeptide repeat protein (DPR) not known to reduce neuronal viability plays a key role in impairing neurodevelopment. Pharmacologically mimicking the effects of the repeat expansion on neurodevelopment increases susceptibility of C9ORF72 mice to motor defects. Thus, the C9ORF72 repeat expansion stunts development of the brain regions prominently affected in C9ORF72 FTD/ALS patients.