Erythropoietin, known for its role in erythroid differentiation, has been shown to be neuroprotective during brain ischaemia in adult animal models. Although high levels of erythropoietin receptor are produced in embryonic brain, the role of erythropoietin during brain development is uncertain. We now provide evidence that erythropoietin acts to stimulate neural progenitor cells and to prevent apoptosis in the embryonic brain. Mice lacking the erythropoietin receptor exhibit severe anaemia and defective cardiac development, and die at embryonic day 13.5 (E13.5). By E12.5, in addition to apoptosis in foetal liver, endocardium and myocardium, the erythropoietin receptor null mouse shows extensive apoptosis in foetal brain. Lack of erythropoietin receptor affects brain development as early as E10.5, resulting in a reduction in the number of neural progenitor cells and increased apoptosis. Corresponding in vitro cultures of cortical cells from Epor–/– mice also exhibited decreases in neuron generation compared with normal controls and increased sensitivity to low oxygen tension with no surviving neurons in Epor–/– cortical cultures after 24 hour exposure to hypoxia. The viability of primary Epor+/+ rodent embryonic cortical neurons was further increased by erythropoietin stimulation. Exposure of these cultures to hypoxia induced erythropoietin expression and a tenfold increase in erythropoietin receptor expression, increased cell survival and decreased apoptosis. Cultures of neuronal progenitor cells also exhibited a proliferative response to erythropoietin stimulation. These data demonstrate that the neuroprotective activity of erythropoietin is observed as early as E10.5 in the developing brain, and that induction of erythropoietin and its receptor by hypoxia may contribute to selective cell survival in the brain.