Studies in avian models have demonstrated an involvement of retinoid signaling in early neural tube patterning. The roles of this signaling pathway at later stages of spinal cord development are only partly characterized. Here we use Raldh2-null mouse mutants rescued from early embryonic lethality to study the consequences of lack of endogenous retinoic acid (RA) in the differentiating spinal cord. Mid-gestation RA deficiency produces prominent structural and molecular deficiencies in dorsal regions of the spinal cord. While targets of Wnt signaling in the dorsal neuronal lineage are unaltered, reductions in Fibroblast Growth Factor (FGF) and Notch signaling are clearly observed. We further provide evidence that endogenous RA is capable of driving stem cell differentiation. Raldh2 deficiency results in a decreased number of spinal cord derived neurospheres, which exhibit a reduced differentiation potential. Raldh2-null neurospheres have a decreased number of cells expressing the neuronal marker β-III-tubulin, while the nestin-positive cell population is increased. Hence, in vivo retinoid deficiency impaired neural stem cell growth. We propose that RA has separable functions in the developing spinal cord to (i) maintain high levels of FGF and Notch signaling and (ii) drive stem cell differentiation, thus restricting both the numbers and the pluripotent character of neural stem cells.