Studies of the olfactory epithelium model system have demonstrated that production of neurons is regulated by negative feedback. Previously, we showed that a locally produced signal, the TGFβ superfamily ligand GDF11, regulates the genesis of olfactory receptor neurons by inhibiting proliferation of the immediate neuronal precursors (INPs) that give rise to them. GDF11 is antagonized by follistatin (FST), which is also produced locally. Here, we show that Fst(-/-) mice exhibit dramatically decreased neurogenesis, a phenotype that can only be partially explained by increased GDF11 activity. Instead, a second FST-binding factor, activin βB (ACTβB), inhibits neurogenesis by a distinct mechanism: whereas GDF11 inhibits expansion of INPs, ACTβB inhibits expansion of stem and early progenitor cells. We present data supporting the concept that these latter cells, previously considered two distinct types, constitute a dynamic stem/progenitor population in which individual cells alternate expression of Sox2 and/or Ascl1. In addition, we demonstrate that interplay between ACTβB and GDF11 determines whether stem/progenitor cells adopt a glial versus neuronal fate. Altogether, the data indicate that the transition between stem cells and committed progenitors is neither sharp nor irreversible and that GDF11, ACTβB and FST are crucial components of a circuit that controls both total cell number and the ratio of neuronal versus glial cells in this system. Thus, our findings demonstrate a close connection between the signals involved in the control of tissue size and those that regulate the proportions of different cell types.