In vertebrate embryogenesis, neural induction is the earliest step through which the fate of embryonic ectoderm to neuroectoderm becomes determined. Cells in the neuroectoderm or neural precursors actively proliferate before they exit from the cell cycle and differentiate into neural cells. However, little is known about the relationship between cell division and neural differentiation, although, in Xenopus, cell division after the onset of gastrulation has been suggested to be nonessential for neural differentiation. Here, we show that the Forkhead transcription factor FoxM1 is required for both proliferation and differentiation of neuronal precursors in early Xenopus embryos. FoxM1 is expressed in the neuroectoderm and is required for cell proliferation in this region. Specifically, inhibition of BMP signaling, an important step for neural induction, induces the expression of FoxM1 and its target G2-M cell-cycle regulators, such as Cdc25B and cyclin B3, thereby promoting cell division in the neuroectoderm. Furthermore, G2-M cell-cycle progression or cell division mediated by FoxM1 or its target G2-M regulators is essential for neuronal differentiation but not for specification of the neuroectoderm. These results suggest that FoxM1 functions to link cell division and neuronal differentiation in early Xenopus embryos.