Neural stem cells give rise to new hippocampal neurons throughout adulthood, and defects in neurogenesis may predispose an individual to mood disorders, such as major depression. Our understanding of the signals controlling this process is limited, so we explored potential pathways regulating adult hippocampal progenitor (AHP) proliferation and neuronal differentiation. We demonstrate that the mood stabilizer lithium directly expands pools of AHPs in vitro, and induces them to become neurons at therapeutically relevant concentrations. We show that these effects are independent of inositol monophosphatase, but dependent on Wnt pathway components. Both downregulation of glycogen synthase kinase-3β, a lithium-sensitive component of the canonical Wnt signaling pathway, and elevated β-catenin, a downstream component of the same pathway produce effects similar to lithium. In contrast, RNAi-mediated inhibition of β-catenin abolishes the proliferative effects of lithium, suggesting that Wnt signal transduction may underlie lithium's therapeutic effect. Together, these data strengthen the connection between psychopharmacologic treatment and the process of adult neurogenesis, while also suggesting the pursuit of modulators of Wnt signaling as a new class of more effective mood stabilizers/antidepressants.