Neural stem cells called neuroblasts (NBs) generate a variety of neuronal and glial cells in the central nervous system of the Drosophila embryo. These NBs, few in number, are selected from a field of neuroepithelial (NE) cells. In the optic lobe of the third instar larva, all NE cells of the outer optic anlage (OOA) develop into either NBs that generate the medulla neurons or lamina neuron precursors of the adult visual system. The number of lamina and medulla neurons must be precisely regulated because photoreceptor neurons project their axons directly to corresponding lamina or medulla neurons. Here, we show that expression of the proneural protein Lethal of scute [L(1)sc] signals the transition of NE cells to NBs in the OOA. L(1)sc expression is transient, progressing in a synchronized and ordered ;proneural wave' that sweeps toward more lateral NEs. l(1)sc expression is sufficient to induce NBs and is necessary for timely onset of NB differentiation. Thus, proneural wave precedes and induces transition of NE cells to NBs. Unpaired (Upd), the ligand for the JAK/STAT signaling pathway, is expressed in the most lateral NE cells. JAK/STAT signaling negatively regulates proneural wave progression and controls the number of NBs in the optic lobe. Our findings suggest that NBs might be balanced with the number of lamina neurons by JAK/STAT regulation of proneural wave progression, thereby providing the developmental basis for the formation of a precise topographic map in the visual center.