As a transcriptional activator of MYC, the single-stranded DNA binding protein FUBP1 functions as an oncogene. Somewhat surprisingly, FUBP1 loss-of-function is predicted to drive the primary brain cancer, oligodendroglioma. Here we aim to take advantage of the conservation of FUBP1 (Psi) in Drosophila to elucidate the molecular basis of FUBP1’s context-dependent tumour suppressor function in the brain. We further address the heterogeneous nature of glioma by dissecting the lineage-specific FUBP1/Psi function in the cortex glial microenvironment, or niche, which provides stem cells with structural support and secreted signals required for stemness and differentiation. Our exciting data demonstrate FUBP1/Psi function in the cortex glia niche is essential for preventing neural stem cell overproliferation. To determine the molecular basis of FUBP1/Psi’s capacity to control neural stem cell fate non-autonomously from the supporting glial niche, we used Targeted DamID (TaDa) to identify direct, genome-wide targets specifically in the cortex glia. We further identified differentially expressed targets via RNA-seq of FACS-isolated FUBP1/Psi-depleted cortex glia compared with control. Intersection of RNA-seq and TaDa identified secreted factors (ligands to the EGFR) and cell adhesion proteins as direct DE targets. Together, our data demonstrate FUBP1/Psi functions cell non-autonomously in the glial niche to prevent neural stem cell renewal and promote differentiation. Thus, we predict FUBP1 loss-of-function drives tumourigenesis, at least in part, by dysregulating glial-stem cell interactions.