During central nervous system development, several transcription factors regulate the differentiation of progenitor cells to postmitotic neurons. Here we describe a novel role for Ikaros-1 in the generation of late-born striatal neurons. Our results show that Ikaros-1 is expressed in the boundary of the striatal germinal zone (GZ)/mantle zone (MZ), where it induces cell cycle arrest of neural progenitors by up-regulation of the cyclin-dependent kinase inhibitor (CDKi) p21(Cip1/Waf1). This effect is coupled with the neuronal differentiation of late precursors, which in turn is critical for the second wave of striatal neurogenesis that gives rise to matrix neurons. Consistently, Ikaros(-/-) mice had fewer striatal projecting neurons and, in particular, enkephalin (ENK)-positive neurons. In addition, overexpression of Ikaros-1 in primary striatal cultures increases the number of calbindin- and ENK-positive neurons. Our results also show that Ikaros-1 acts downstream of the Dlx family of transcription factors, insofar as its expression is lost in Dlx1/2 double knockout mice. However, we demonstrate that Ikaros-1 and Ebf-1 independently regulate the final determination of the two populations of striatal projection neurons of the matrix compartment, ENK- and substance P-positive neurons. In conclusion, our findings identify Ikaros-1 as a modulator of cell cycle exit of neural progenitors that gives rise to the neurogenesis of ENK-positive striatal neurons.