During Drosophila optic lobe development, proliferation and differentiation must be tightly modulated to reach its normal size for proper functioning. The JAK/STAT pathway plays pleiotropic roles in Drosophila development and in the larval brain, has been shown to inhibit medulla neuroblast formation. In this study, we find that JAK/STAT activity is required for the maintenance and proliferation of the neuroepithelial stem cells in the optic lobe. In loss-of-function JAK/STAT mutant brains, the neuroepithelial cells lose epithelial cell characters and differentiate prematurely while ectopic activation of this pathway is sufficient to induce neuroepithelial overgrowth in the optic lobe. We further show that Notch signaling acts downstream of JAK/STAT to control the maintenance and growth of the optic lobe neuroepithelium. Thus, in addition to its role in suppression of neuroblast formation, the JAK/STAT pathway is necessary and sufficient for optic lobe neuroepithelial growth. (C) 2011 Elsevier Inc. All rights reserved.