To progress towards differentiation, progeny of stem cells need to extinguish expression of stem-cell maintenance genes. Failures in such mechanisms can drive tumorigenesis. In Drosophila neural stem cell (NSC) lineages, excessive Notch signalling results in supernumerary NSCs causing hyperplasia. However, onset of hyperplasia is considerably delayed implying there are mechanisms that resist the mitogenic signal. Monitoring the live expression of a Notch target gene, E(spl)mγ, revealed that normal attenuation is still initiated in the presence of excess Notch activity so that re-emergence of NSC properties occurs only in older progeny. Screening for factors responsible, we found that depletion of Mi-2/NuRD ATP remodeling complex dramatically enhanced Notch-induced hyperplasia. Under these conditions, E(spl)mγ was no longer extinguished in NSC progeny. We propose that Mi-2 is required for decommissioning stem-cell enhancers in their progeny, enabling the switch towards more differentiated fates and rendering them insensitive to mitogenic factors such as Notch.