Prenatal folic acid (FA) supplementation prevents neural tube defects. Folate receptor alpha (FRalpha) is critical for embryonic development, including neural crest (NC) development. Previously we showed that FRalpha translocates to the nucleus in response to FA, where it acts as a transcription factor. In this study we examined if FA through interaction with FRalpha regulates stem cell characteristics of cranial neural crest cells (CNCCs)-critical for normal development. We hypothesized that FRalpha up-regulates coding genes and simultaneously down-regulates non-coding miRNA which targets coding genes in CNCCs. Quantitative RT- PCR and chromatin immunoprecipitation (ChIP) showed that FRalpha up-regulates Oct4, Sox2 and Klf4 by binding to their cis-regulator elements-5'enhancer/promoters defined by H3K27Ac and p300 occupancy. FA via FRalpha down-regulates miRNAs, miR-138 and miR-let-7, which target Oct4 and Trim71 (an Oct4 downstream effector), respectively. Co-immunoprecipitation data suggests that FRalpha interacts with the Drosha-DGCR8 complex to affect pre-miRNA processing. Transfecting anti-miR-138 or anti-miR-let-7 into non-proliferating NCCs derived from Splotch (Sp-/- ), restored their proliferation potential. In summary, these results suggest a novel pleiotropic role of FRalpha: (i) direct activation of Oct4, Sox2 and Klf4 genes; and (ii) repression of biogenesis of miRNAs that target these genes or their effector molecules. This article is protected by copyright. All rights reserved.