Whether and how mechanisms intrinsic to stem cells modulate their proliferation and differentiation are two central questions in stem cell biology. Although exogenous basic fibroblast growth factor 2 (FGF-2/Fgf-2) is commonly used to expand adult neural stem/progenitor cells (NSPCs) in vitro, we do not yet understand the functional significance or the molecular regulation of Fgf-2 expressed endogenously by adult NSPCs. We previously demonstrated that methylated CpG binding protein 1 (MBD1/Mbd1) is a transcriptional repressor of Fgf-2 and is enriched in adult brains. Mbd1 deficiency in mice selectively affected adult neurogenesis and the differentiation of NSPCs. Here we show that an Mbd1 and DNA methylation-mediated epigenetic mechanism regulated the expression of stem cell mitogen Fgf-2 in adult NSPCs. Mbd1 bound to the Fgf-2 promoter and regulates its expression in adult NSPCs. In the absence of functional Mbd1, the Fgf-2 promoter was hypomethylated, and treatment with a DNA methylation inhibitor resulted in increased Fgf-2 expression in adult NSPCs. We further demonstrated that both acute knockdown of Mbd1 or overexpression of Fgf-2 in adult NSPCs inhibited their neuronal differentiation, which could be responsible for the neurogenic deficits observed in Mbd1-deficient mice. These data indicate that intrinsic epigenetic mechanisms play critical roles in the regulation of adult NSPC functions.