The developmental protein Numb is a major determinant of binary cell fates^,,. It is also required for the differentiation of cerebellar granule cell progenitors (GCPs) at a stage of development responsive to the morphogenic glycoprotein Hedehog^,. Hedgehog signalling is crucial for the physiological maintenance and self-renewal of neural stem cells and its deregulation is responsible for their progression towards tumorigenesis^,,,,,. The mechanisms that inhibit this pathway during the differentiation stage are poorly understood. Here, we identify Numb as a Hedgehog-pathway inhibitor that is downregulated in early GCPs and GCP-derived cancer cells. We demonstrate that the Hedgehog transcription factor Gli1 is targeted by Numb for Itch-dependent ubiquitination, which suppresses Hedgehog signals, thus arresting growth and promoting cell differentiation. This novel Numb-dependent regulatory loop may limit the extent and duration of Hedgehog signalling during neural-progenitor differentiation, and its subversion may be a relevant event in brain tumorigenesis.