© 2019, The Author(s). The cerebellar cortex is involved in the control of diverse motor and non-motor functions. Its principal circuit elements are the Purkinje cells that integrate incoming excitatory and local inhibitory inputs and provide the sole output of the cerebellar cortex. However, the transcriptional control of circuit assembly in the cerebellar cortex is not well understood. Here, we show that NeuroD2, a neuronal basic helix-loop-helix (bHLH) transcription factor, promotes the postnatal survival of both granule cells and molecular layer interneurons (basket and stellate cells). However, while NeuroD2 is not essential for the integration of surviving granule cells into the excitatory circuit, it is required for the terminal differentiation of basket cells. Axons of surviving NeuroD2-deficient basket cells follow irregular trajectories and their inhibitory terminals are virtually absent from Purkinje cells in Neurod2 mutants. As a result inhibitory, but not excitatory, input to Purkinje cells is strongly reduced in the absence of NeuroD2. Together, we conclude that NeuroD2 is necessary to instruct a terminal differentiation program in basket cells that regulates targeted axon growth and inhibitory synapse formation. An imbalance of excitation and inhibition in the cerebellar cortex affecting Purkinje cell output may underlay impaired adaptive motor learning observed in Neurod2 mutants.