Neural progenitor cells (NPCs) are multipotent cells that can self-renew and differentiate into neurons and glial cells. However, mechanisms that control their fate decisions are poorly understood. Here, we show that Smek1, a regulatory subunit of the serine/threonine protein phosphatase PP4, promotes neuronal differentiation and suppresses the proliferative capacity of NPCs. We identify the cell polarity protein Par3, a negative regulator of neuronal differentiation, as a Smek1 substrate and demonstrate that Smek1 suppresses its activity. We also show that Smek1, which is predominantly nuclear in NPCs, is excluded from the nucleus during mitosis, allowing it to interact with cortical/cytoplasmic Par3 and mediate its dephosphorylation by the catalytic subunit PP4c. These results identify the PP4/Smek1 complex as a key regulator of neurogenesis.