During development, neural precursors proliferate in one location and migrate to the residence of their mature function. The transition from a proliferative stage to a migratory stage is a critical juncture; errors in this process may result in tumor formation, mental retardation, or epilepsy. This transition could be the result of a simple sequential process in which precursors exit the cell cycle and then begin to migrate or a dynamically regulated process in which migration away from a mitogenic niche induces precursors to exit the cell cycle. Here, we show, using in vivo and in vitro approaches, that granule cell precursors proliferate when they are exposed to the microenvironment of the external granule cell layer (EGL) and exit the cell cycle as a result of migrating away from this environment. In vivo, granule cell precursors that remain in the EGL because of impaired migration continue to proliferate in the mitogenic niche of the EGL. In vitro, granule cell precursors that are introduced into an organotypic cerebellar slice proliferate preferentially in the EGL. We identify Sonic Hedgehog as a critical component of the EGL mitogenic niche. Together, these data indicate that migration away from a mitogenic niche promotes transition from a proliferative to a nonproliferative, migratory stage.