Regulation of protein expression is essential for maintaining normal cell function. Proteasomes play important roles in protein degradation and dysregulation of proteasomes is implicated in neurodegenerative disorders. In this study, using a proteasome inhibitor MG132, we showed that proteasome inhibition reduces neural stem cell (NSC) proliferation and is toxic to NSCs. Interestingly, MG132 treatment increased the percentage of neurons in both proliferation and differentiation culture conditions of NSCs. Proteasome inhibition reduced B-cell lymphoma 2 (Bcl-2)/Bcl-2 associated X protein ratio. In addition, MG132 treatment induced cAMP response element-binding protein phosphorylation and increased the expression of brain-derived neurotrophic factor transcripts and proteins. These data suggest that proteasome function is important for NSC survival and differentiation. Moreover, although MG132 is toxic to NSCs, it may increase neurogenesis. Therefore, by modifying MG132 chemical structure and developing none toxic proteasome inhibitors, neurogenic chemicals can be developed to control NSC cell fate.