We show here the role of retinoic acid receptor (RAR) beta and alpha signalling in proliferation and differentiation of endogenous adult forebrain neural progenitor cells (NPCs). RARbeta activation stimulates Sonic hedgehog signalling (Shh), and induces the proliferation of the NPCs. They can be induced to become Doublecortin (DCX) expressing migrating neuroblasts by RARalpha signalling, some of which differentiate into cholinergic neurons. The same signalling pathways cause the proliferation of embryonic forebrain NPCs. These cells express glial fibrillary acidic protein (GFAP) and are predominantly uni/bipolar, two characteristics of neuronal progenitor cells. We further show that fibroblast growth factor (FGF) signalling, induces the expression of the retinoic acid degrading enzyme cytochrome P450 (cyp) 26a1, and that one of its products, 4-oxo-RA, mimics the action of the RARalpha agonist in the differentiation of the NPCs into cholinergic neurons.