Basic helix-loop-helix (bHLH) proneural proteins promote neurogenesis through transcriptional regulation. Although much is known about the tissue-specific regulation of proneural gene expression, how proneural proteins interact with transcriptional machinery to activate downstream target genes is less clear. Drosophila proneural proteins Achaete (Ac) and Scute (Sc) induce external sensory organ formation by activating neural precursor gene expression. Through co-immunoprecipitation and mass spectrometric analyses, we found that nuclear but not cytoplasmic actin associated with the Ac and Sc proteins in Drosophila S2 cells. Daughterless (Da), the common heterodimeric partner of Drosophila bHLH proteins, was observed to associate with nuclear actin through proneural proteins. A yeast two-hybrid assay revealed that the binding specificity between actin and Ac or Sc was conserved in yeast nuclei without the presence of additional Drosophila factors. We further show that actin is required in external sensory organ formation. Reduction in actin gene activity impaired proneural-protein-dependent expression of the neural precursor genes, as well as formation of neural precursors. Furthermore, increased nuclear actin levels, obtained by expression of nucleus-localized actin, elevated Ac-Da-dependent gene transcription as well as Ac-mediated external sensory organ formation. Taken together, our in vivo and in vitro observations suggest a novel link for actin in proneural-protein-mediated transcriptional activation and neural precursor differentiation.