Through whole-mount in situ hybridisation screen on medaka (Oryzias latipes) brain, Ol-insm1b, a member of the Insm1/Mlt1 subfamily of SNAG-domain containing genes, has been isolated. It is strongly expressed during neurogenesis and pancreas organogenesis, with a pattern that suggests a role in cell cycle exit. Here, we describe Ol-insm1b expression pattern throughout development and in adult brain, and we report on its functional characterisation. Our data point to a previously unravelled role for Ol-insm1b as a down-regulator of cell proliferation during development, as it slows down the cycle without triggering apoptosis. Clonal analysis demonstrates that this effect is cell-autonomous, and, through molecular dissection studies, we demonstrate that it is likely to be non-transcriptional, albeit mediated by zinc-finger domains. Additionally, we report that Ol-insm1b mRNA, when injected in one cell of two-cell stage embryos, exhibits a surprising behaviour: it does not spread uniformly amongst daughter cells but remains cytoplasmically localised in the progeny of the injected blastomere. Our experiments suggest that Insm1 is a negative regulator of cell proliferation, possibly through mechanisms that do not involve modulation of transcription.