Stem cells that indirectly generate differentiated cells through intermediate progenitors drives vertebrate brain evolution. Due to a lack of lineage information, how stem cell functionality, including the competency to generate intermediate progenitors, becomes extinguished during progenitor commitment remains unclear. Type II neuroblasts in fly larval brains divide asymmetrically to generate a neuroblast and a progeny that commits to an intermediate progenitor (INP) identity. We identified Tailless (Tll) as a master regulator of type II neuroblast functional identity, including the competency to generate INPs. Successive expression of transcriptional repressors functions through Hdac3 to silence tll during INP commitment. Reducing repressor activity allows re-activation of Notch in INPs to ectopically induce tll expression driving supernumerary neuroblast formation. Knocking-down hdac3 function prevents downregulation of tll during INP commitment. We propose that continual inactivation of stem cell identity genes allows intermediate progenitors to stably commit to generating diverse differentiated cells during indirect neurogenesis.