The Disrupted in Schizophrenia 1 (DISC1) gene is disrupted by a balanced chromosomal translocation (1; 11) (q42; q14.3) in a Scottish family with a high incidence of major depression, schizophrenia, and bipolar disorder. Subsequent studies provided indications that DISC1 plays a role in brain development. Here, we demonstrate that suppression of DISC1 expression reduces neural progenitor proliferation, leading to premature cell cycle exit and differentiation. Several lines of evidence suggest that DISC1 mediates this function by regulating GSK3β. First, DISC1 inhibits GSK3β activity through direct physical interaction, which reduces β-catenin phosphorylation and stabilizes β-catenin. Importantly, expression of stabilized β-catenin overrides the impairment of progenitor proliferation caused by DISC1 loss of function. Furthermore, GSK3 inhibitors normalize progenitor proliferation and behavioral defects caused by DISC1 loss of function. Together, these results implicate DISC1 in GSK3β/β-catenin signaling pathways and provide a framework for understanding how alterations in this pathway may contribute to the etiology of psychiatric disorders.