How a limited progenitor pool generates neuronal diversity remains a longstanding question. In the Drosophila lamina, a single progenitor type generates five lamina neuron subtypes, second-order neurons downstream of photoreceptors. Here, we identify a pan-class homeodomain transcription factor (HDTF), induced by Hedgehog signaling in progenitors and maintained across all five subtypes, that drives diversification within the progenitor-defined lamina class. This pan-class HDTF orchestrates a four-step program across the progenitor-to-newborn neuron transition: establishing progenitor identity, promoting cell-cycle exit, inducing subtype-specific differentially expressed (DE) HDTFs, and acting as their obligate cofactor to specify distinct subtypes. Loss of DE-HDTFs in newborn, but not older, neurons causes subtype-specific fate conversions at molecular, morphological, and functional levels, thereby reducing diversity. Notably, we find that mouse retinal neurons express analogous pan-class and DE-HDTFs, indicating evolutionary conservation. Our findings define a generalizable progenitor-to-newborn neuron HDTF cascade by which progenitor identity directs subtype diversification within a neuronal class.