Intermediate neural progenitor (INP) cells are transient amplifying neurogenic precursor cells generated from neural stem cells. Amplification of INPs significantly increases the number of neurons and glia produced from neural stem cells. In Drosophila larval brains, INPs are produced from type II neuroblasts (NBs, Drosophila neural stem cells), which lack the proneural protein Asense (Ase) but not from Ase-expressing type I NBs. To date, little is known about how Ase is suppressed in type II NBs and how the generation of INPs is controlled. Here we show that one isoform of the Ets transcription factor Pointed (Pnt), PntP1, is specifically expressed in type II NBs, immature INPs, and newly mature INPs in type II NB lineages. Partial loss of PntP1 in genetic mosaic clones or ectopic expression of the Pnt antagonist Yan, an Ets family transcriptional repressor, results in a reduction or elimination of INPs and ectopic expression of Ase in type II NBs. Conversely, ectopic expression of PntP1 in type I NBs suppresses Ase expression the NB and induces ectopic INP-like cells in a process that depends on the activity of the tumor suppressor Brain tumor. Our findings suggest that PntP1 is both necessary and sufficient for the suppression of Ase in type II NBs and the generation of INPs in Drosophila larval brains.