Intermediate neural progenitors (INPs) boost the number and diversity of neurons generated from neural stem cells (NSCs) by undergoing transient proliferation. In the developing Drosophila brains, INPs are generated from type II neuroblasts (NBs). In order to maintain type II NB identity and their capability to produce INPs, the proneural protein Asense (Ase) needs to be silenced by the Ets transcription factor pointed P1 (PntP1), a master regulator of type II NB development. However, the molecular mechanisms underlying the PntP1-mediated suppression of Ase is still unclear. In this study, we utilized genetic and molecular approaches to determine the transcriptional property of PntP1 and identify the direct downstream effector of PntP1 and the cis-DNA elements that mediate the suppression of ase. Our results demonstrate that PntP1 directly activates the expression of the transcriptional repressor, Tailless (Tll), by binding to seven Ets-binding sites, and Tll in turn suppresses the expression of Ase in type II NBs by binding to two hexameric core half-site motifs. We further show that Tll provides positive feedback to maintain the expression of PntP1 and the identity of type II NBs. Thus, our study identifies a novel direct target of PntP1 and reveals mechanistic details of the specification and maintenance of the type II NB identity by PntP1.