Signaling mediated by Notch receptors is crucial for the development of many organs and the maintenance of various stem cell populations. The activation of Notch signaling is first detectable by the expression of an effector gene, Hes5, in the neuroepithelium of mouse embryos at embryonic day (E) 8.0-8.5, and this activation is indispensable for the generation of neural stem cells. However, the molecular mechanism by which Hes5 expression is initiated in stem-producing cells remains unknown. We found that mammalian Gcm1 and Gcm2 (glial cells missing 1 and 2) are involved in the epigenetic regulation of Hes5 transcription by DNA demethylation independently of DNA replication. Loss of both Gcm genes and subsequent lack of Hes5 upregulation in the neuroepithelium of E7.5-8.5 Gcm1(-/-); Gcm2(-/-) mice resulted in the impaired induction of neural stem cells. Our data suggest that Hes5 expression is serially activated first by Gcms and later by the canonical Notch pathway.