Floor plate (FP) cells, the ventral midline cells of the developing neural tube, have long been thought to be non-neurogenic organizer cells that control neuronal patterning and axonal guidance. Recent studies have revealed that mesencephalic FP (mesFP) cells have neurogenic activity and generate dopaminergic neurons. However, the mechanisms underlying the control of neurogenic potential in FP cells are not yet fully understood. Here we identified the bHLH factor Nato3 as an FP-specific transcription factor. In Nato3-null mutant mice, FP cells in the spinal cord were correctly specified, but could not properly mature. By contrast, in the developing mesencephalon, loss of Nato3 did not affect FP differentiation, but led to loss of neurogenic activity in the medial subpopulation of mesFP cells by suppressing proneural gene expression and inducing cell cycle arrest. As a consequence, the number of midbrain dopaminergic neurons generated was decreased in mutants. We also found that Hes1, which is known to be required for non-dividing organizer cell development in the neural tube, was aberrantly upregulated in the mesFP cells of Nato3 mutants. Consistently, forced expression of Nato3 repressed Hes1 expression and consequently induced premature neurogenesis. Finally, we showed that forced expression of Hes1 in mesFP cells induced cell cycle arrest and downregulation of proneural factors. Taken together, these results suggest that Nato3 confers neurogenic potential on mesFP cells by suppressing classical non-neurogenic FP cell differentiation, at least in part, through repressing Hes1.