Cerebellar granule cells originate from precursors located in the dorsal region of rhombomere one within the hindbrain of developing embryos. They undergo proliferation for an extensive period well into postnatal stages of development to form the major cell type of the cerebellum, the most populous structure within the mammalian brain. Granule cell development is highly dependent upon the cerebellar environment and contact with neighbouring cells. In recent years, the molecular basis of these interactions has started to be unravelled. Granule cell precursors and the molecular mechanisms involved in controlling their proliferation have been shown to be involved in the pathogenesis of medulloblastoma, the most common malignant pediatric brain tumour. Here, we review the control of granule cell generation with emphasis on the molecular regulators of cell proliferation and differentiation during normal and malignant development.