Overexpression of the polycomb group gene Bmi1 promotes cell proliferation and induces leukaemia through repression of Cdkn2a (also known as ink4a/Arf) tumour suppressors. Conversely, loss of Bmi1 leads to haematological defects and severe progressive neurological abnormalities in which de-repression of the ink4a/Arf locus is critically implicated. Here, we show that Bmi1 is strongly expressed in proliferating cerebellar precursor cells in mice and humans. Using Bmi1-null mice we demonstrate a crucial role for Bmi1 in clonal expansion of granule cell precursors both in vivo and in vitro. Deregulated proliferation of these progenitor cells, by activation of the sonic hedgehog (Shh) pathway, leads to medulloblastoma development. We also demonstrate linked overexpression of BMI1 and patched (PTCH), suggestive of SHH pathway activation, in a substantial fraction of primary human medulloblastomas. Together with the rapid induction of Bmi1 expression on addition of Shh or on overexpression of the Shh target Gli1 in cerebellar granule cell cultures, these findings implicate BMI1 overexpression as an alternative or additive mechanism in the pathogenesis of medulloblastomas, and highlight a role for Bmi1-containing polycomb complexes in proliferation of cerebellar precursor cells.