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miRNA populations, including mammalian homologues of lin-4 (mir-125) and let-7, undergo a marked transition during stem-cell differentiation. Originally identified on the basis of their mutational phenotypes in stem-cell maturation, mir-125 and let-7 are strongly induced during neural differentiation of embryonic stem (ES) cells and embryocarcinoma (EC) cells. We report that embryonic neural stem (NS) cells express let-7 and mir-125, and investigate post-transcriptional mechanisms contributing to the induction of let-7. We demonstrate that the pluripotency factor Lin-28 binds the pre-let-7 RNA and inhibits processing by the Dicer ribonuclease in ES and EC cells. In NS cells, Lin-28 is downregulated by mir-125 and let-7, allowing processing of pre-let-7 to proceed. Suppression of let-7 or mir-125 activity in NS cells led to upregulation of Lin-28 and loss of pre-let-7 processing activity, suggesting that let-7, mir-125 and lin-28 participate in an autoregulatory circuit that controls miRNA processing during NS-cell commitment.