A number of transcription factors that are expressed within most, if not all, embryonic neuroblast (NB) lineages participate in neural subtype specification. Some have been extensively studied in several NB lineages (e.g. components of the temporal gene cascade) whereas others only within specific NB lineages. To what extent they function in other lineages remains unknown. Klumpfuss (Klu), the Drosophila ortholog of the mammalian Wilms tumor 1 (WT1) protein, is one such transcription factor. Studies in the NB4-2 lineage have suggested that Klu functions to ensure that the two ganglion mother cells (GMCs) in this embryonic NB lineage acquire different fates. Owing to limited lineage marker availability, these observations were made only for the NB4-2 lineage. Recent findings reveal that Klu is necessary for larval neuroblast growth and self-renewal. We have extended the study of Klu to the well-known embryonic NB5-6T lineage and describe a novel role for Klu in the Drosophila embryonic CNS. Our results demonstrate that Klu is expressed specifically in the postmitotic Ap4/FMRFa neuron, promoting its differentiation through the initiation of BMP signaling. Our findings indicate a pleiotropic function of Klu in Ap cluster specification in general and particularly in Ap4 neuron differentiation, indicating that Klu is a multitasking transcription factor. Finally, our studies indicate that a transitory downregulation of klu is crucial for the specification of the Ap4/FMRFa neuron. Similar to WT1, klu seems to have either self-renewal or differentiation-promoting functions, depending on the developmental context.