The neural tube, the embryonic precursor to the vertebrate central nervous system, comprises distinct progenitor and neuronal domains, each with specific proliferation programs. In this study, we identified TMEM196, a novel transmembrane protein that plays a crucial role in regulating cell proliferation in the floor plate in chick embryos. TMEM196 is expressed in the floor plate, and its overexpression leads to reduced cell proliferation without affecting the pattern formation of the neural tube. We also established the floor plate differentiation protocol of the mouse embryonic stem cells, and analyzed the function of TMEM196 with this system. Mutating the Tmem196 gene does not alter cell division and overall differentiation remains unchanged within the neural cells. However, TMEM196 inhibits Wnt signaling, and Tmem196 mutant cells exhibit aberrant paraxial mesoderm differentiation, suggesting that TMEM196 selects the floor plate cell fate at the binary decision of the neuromesodermal cells. These findings highlight TMEM196 as a key regulator of both cell proliferation and floor plate determination, contributing to proper regionalization during embryogenesis.